Final answer:
A collision problem, where two different inputs to a hash function produce the same output, has been observed in the hashing algorithm SHA1. AES and Blowfish are not hashing algorithms but are used for encryption, and SHA-256 is still considered secure against known collision attacks.
Step-by-step explanation:
The question 'A Collision problem is seen in which of the following hashing algorithms?' refers to a scenario where two different inputs to a hash function produce the same output, which is known as a hash collision. Among the options given, the hashing algorithm where collisions have been found is C). SHA1.
Hashing algorithms such as SHA1 are designed to minimize the possibility of collisions, but they are not completely immune. In fact, researchers have found ways to generate collisions in SHA1, making it less secure than it once was. For this reason, it's now recommended to use more secure alternatives like SHA-256 which remains resistant to known collision attacks. This is not directly a concern for symmetric key algorithms like AES or the encryption algorithm Blowfish, as they are not hashing functions and are used for encryption rather than generating fixed-size outputs from variable size inputs.