Since I told him to post here with all of his information, but he didn't...
He's running Skyfire EMU 4.0.2.
He has a website registration page which correctly adds an account to the server database with a hashed password. He says that the hashing is correct and should work.
He is unable to log into any account created using the registration page unless he manually edits the database and types the password in using plaintext instead of a hashed password. All of his attempts at using a hashed password instead have failed.
I'm assuming that his hashing is incorrect, but there's always the possibility that the core doesn't support it even though I find that very unlikely.