Just to make it more simple...
Hacking
Illegal access to a computer carried out for malevolent or fraudulent purposes or just for fun.
Cracking
The act of breaking into a computer system; what a cracker does. Contrary to widespread myth, this does not usually involve some mysterious leap of hackerly brilliance, but rather persistence and the dogged repetition of a handful of fairly well-known tricks that exploit common weaknesses in the security of target systems. Accordingly, most crackers are only mediocre hackers.
Cracker
One who breaks security on a system. Coined ca. 1985 by hackers in defense against journalistic misuse of hacker (q.v., sense 8). An earlier attempt to establish `worm' in this sense around 1981-82 on Usenet was largely a failure.
Use of both these neologisms reflects a strong revulsion against the theft and vandalism perpetrated by cracking rings. While it is expected that any real hacker will have done some playful cracking and knows many of the basic techniques, anyone past larval stage is expected to have outgrown the desire to do so except for immediate, benign, practical reasons (for example, if it's necessary to get around some security in order to get some work done).
Thus, there is far less overlap between hackerdom and crackerdom than the mundane reader misled by sensationalistic journalism might expect. Crackers tend to gather in small, tight-knit, very secretive groups that have little overlap with the huge, open poly-culture this lexicon describes; though crackers often like to describe themselves as hackers, most true hackers consider them a separate and lower form of life.
Ethical considerations aside, hackers figure that anyone who can't imagine a more interesting way to play with their computers than breaking into someone else's has to be pretty losing.
Hacker
Someone who breaks into computer systems for the sack of doing it. Usually not malicious. Not to be confused with cracker.