That functionality is included in the user registration solution.
To do it by hand you would:
1) use universal email to send the email
2) create the page to activate the accounts
3) add a link to that page in your email
Take it in steps. Can you get an email to send in general? Are you able to create a page that updates and activates an account in general? From there it is just a matter of constructing the link in the email which shouldn't be that difficult.