dummy website not logged in

Hi, everybody,
i set up a dummy website (localhost) in my laptop, to test the login, logout, and regiser section. when i sign up as a new subscriber (named peter, for instance), the back end records everything, incl. the initial password set by Peter. but when i log in with that user name, i am told that the password is wrong. i have to log in as admin, and generate a password to that user (peter ,in this case). and Peter can log in with the generated password then.
Is such trouble due to my back-end configuration, or the fact that it’s a dummy site that Peter cannot receive any confirm email in the real world, so that he can’t finish the complete registration? and thus, cannot log in with his initially set password?
Pls give me some help. thanks.