sending encrypted password instead of random generated password

I have just completed the security assist wizard and the solution recepie tutorials and Security Assist does not seem to be working. I have come accross the ff errors.

1. When I fill in the registration form it always seems to fail and take me to the forgot password page.

2. On my users_EmailPW.php page, I followed the solution recepie tutorial exactly but ended up with the following server behaviors

ecart set session value (NewPW)
! update record (users) - red exclamation mark appeared.
Security Assist Email Password
Security Assist Email Password
Security Assist Email Password - 3 instances appeared.

So in a nutshell when I test the registration page (fill in details), it takes me to the login page correctly. When I try to log in, (it appears to fail) it takes me to the forgot password page. When I type my email and submit, it sends the encrpted password email instead of the unencrypted password. When I check my database the registered details are there with the encrypted password. However when i try to log in it always sends me to the forgot password page. I cannot figured out what is wrong as I followed the tutorial word for word.