Just to be totally clear, do you have “account suffix” set? If so, the name in the WP database needs to be usernameAccountSuffix. So, if a username is jdoe, and account suffix is @foo, the username in the WordPress database is jdoe@foo (, but what the user needs to type to log in is jdoe.)
As for failing at the WP password level, this does not make sense at all. This plugin disabled the WP password box. You could not have set a user’s password, not without first disabling the plugin. If you can set passwords, some other plugin must be interfering in some way and overriding this one (I think).