User password reset disabled, php mail() works OK

We run a multisite install but users are reporting problems resetting their passwords.

When I user goes to the wp-admin login URL, clicks on “Lost your password?” and gets taken to wp-login.php?action=lostpassword all that appears is a message that says “Disabled”.

I’ve searched through forums and people suggest that it’s a problem with PHPs mail() function being turned off but it isn’t, if I create new users through the Dashboard they all get email notifications of their account so WordPress can definitely send email.

What else could it be? I’ve not manually editing anything to disable it or installed any of the plugins that disable the lost password link.

Any help would be great, other info that might help, we don’t allow new user registrations, we manually create users and sites. However I did try temporarily turning on the ability for anyone to sign up and create sites but that didn’t fix the issue.

Cheers,
Rich