I am thinking that could be a bug or maybe not if block 3 is for the registration. Did you try a different block? I guess sitewide really means sitewide.
I agree with Hannah, the safe way would require them to change their password manually. How I would do it is assuming you are using the same domain name but now a different website. You could find the phrase for the text on the sign-in page (like the word sign in) and add text to that phrase so they understand the why and what they have to do :)
So, for the import you want to fill in the rest of the info for the table phpfox_user so first I would make a user and create a really long password...at least 16 characters with some caps and numbers and a special character. Then I would go to the phpfox_user table and copy the password and password_salt field data for that user and use that for all the users until the set up one on their own. You want a difficult initial password because if someone figures it out they will have all of them. But because each user that request a new password does not get to see what the current password is...this may work. Good luck.
Depending on the group's privacy setting people join a group. If you are the owner of the group then you can manage the group and in the settings, there is a tab called invite.
