Send New User Email: Password Encrypted

I've never heard of that error, and I can't imagine why you'd be seeing it. There's a couple things I'd recommend checking..

1) Joomla 2.5.9 is more than a year old. There have been multiple bug-fixes in Joomla since then, and it's possible one of those is causing this issue. I'd definitely recommend upgrading to 2.5.18, the latest, for the bug-fixes and security fixes that have been implemented.
2) Can you let me know if you have any plugins that may be altering the user registration flow, in particular the password? Anything else that auto-generates a password or checks it for validity or anything like that that isn't a core part of Joomla? Specifically, I'd recommend looking in the Authentication, System and User plugin group as well as for any user-management extensions (Community Builder, etc). If you have any non-Joomla core extensions like those, try disabling them, temporarily, and see if that fixes the issue.

Keep me posted if the helps narrow things down.

Thanks,
Alex

I'm a bit confused then. If you're integrating with CB and you have the Social Profiles - Community Builder plugin enabled, then JFBConnect does not send the new user registration email to users. We completely leave that to CB to send and it should be whatever email you have configured in CB.

If the Social Profiles - CB plugin is disabled, then JFBConnect would be sending the email. In that case, please make sure (if you are using Automatic Registration) that the "Generate Random Password" setting in the JFBConnect -> Configuration area is enabled.

If none of that helps, let me know a URL we can register with and we'll see what happens and help you diagnose things from there.

Thanks,
Alex