Welcome to BuddyDev.
Are you using BuddyPress Registration Option or any similar plugin that restricts user registration?
Also, which version of BuddyPress are you using? Is it a normal WordPress install or a multisite? Please let me know and I will assist.
Can you please try disabling BuddyPress Registration Option and check this. I am assuming that the registration option might be preventing user account from being activated(It holds in moderation).
Please check and let me know.
PS: is BuddyPress Custom Login Page the BuddyForms plugin?
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