Ok. So with that option, all users become inactive by default, but even when you make them active, their username/password data won't change. Even if they have got that in email, what is so critical in it? You can edit the email template to put a note, that user account will be activated in 24 hours and THEN they will be able to use the data they received.
It seems that some people have problems with understanding that receiving the e-mail with the password does not mean that the user has been validated by the administrator..
Exactly. Modify email template and lets you users KNOW about it.
If you would like to send user an email notification upon his activation, that's another story. I think, a specific add-on will be needed for that, miniBB doesn't contain this by default, as it's a very, very rare option! All accounts should be opened by default, that will save lots of your time. And if you run the small board, then you don't even have to think about such small details...