I just came across the same issue. Here’s the solution I’ve found.
Users that were created prior to the plugin being installed do not have a user meta field for pw_user_status. The plugin is checking for the value of this to be approved before it allows you to recover your password.
On line 432 of new-user-approval.php I changed it to be:
if ( $user_data->pw_user_status && $user_data->pw_user_status != 'approved' ) {
That way it only prevents the reset if there is that meta key AND it is not marked approved.
