Yes, that’s what is happening for me. But it took a a lot of playing with settings to get there…
I’m on the West Coast, so not that late 😉
For me it works only if BOTH verify and moderate boxes are checked.
I never heard back, but what I have found works is that if you activate the “verification” process (ie registering user has to verify their email by clicking a link… then the admin gets a notice… and can approve… and then it sends the user an “approved” email from the template. I’m not sure WHY it doesn’t work without verification, but it does with it!