Using Administrator Approval of New Registrants

I want to set up my site so that I can approve all users who wish to sign up. This is easy enough to set, but:

Even with the setting "visitors can create an account but administrator approval is required", the user immediately gets an email with a password. But, if the user tries to use this new login, it doesn't work, since the account is 'blocked' until the administrator releases it. And, when the admin does release, no email notification is sent.

Am I doing something wrong here? As it is, it is kind of ugly... user gets a login notification which won't work, then gets nothing when admin allows user to post.

TIA

BeastRider