Unfortunately, multi-site-user does not solve the problem. I am setting up a mainsite which is blog, and a second site which is a buddypress site. At both sites, I use S&S. When a user register, she fills in the form incl. the passwords, and she will have an activation code mailed. But, three problems:
1. The registration form will not finish itself, but will turn up again with empty password fields.
2. If the user uses the activation link from the mail, nothing seems to happen.
3. If the user tries to register again, she will be told that login and mail as well are in use.
The explanation is that the user is registred in the network administration part only. None of the two sites know of the user, though an admin manually may transfer the user to the two sites. And then the user may realise that login and password as well were retained.
It looks like your registration page overrules other registration functions, such as multisite-user. I have also tried to use other registration plugins, but they seem to be overruled as well.
Incidentally, your theme is very nice and well-functioning.
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