Well the fix was a lot easier than I thought.
Open up email-login.php (within the plugin's folder /wp-email-login/) and edit the main "dr_email_login_authenticate" function:
function dr_email_login_authenticate( $user, $username, $password ) {
if ( !empty( $username ) )
$user = get_user_by( 'email', $username );
if ( isset( $user->user_login, $user ) )
$username = $user->user_login;
if ($user->user_status != '2') {
return wp_authenticate_username_password( null, $username, $password );
}
else {
return new WP_Error('invalid_username', __('<strong>ERROR</strong>: Your account has not been activated. Check your email for the activation link.'));
}
}
remove_filter( 'authenticate', 'wp_authenticate_username_password', 20, 3 );
add_filter( 'authenticate', 'dr_email_login_authenticate', 20, 3 );
This includes an IF Statement that says; if the user's status is not 2 (ie; not activated), let them login, otherwise show them an error.