TOPIC: Auto create not assigned Joomla user to group

I'm running DTR 2.7.18a on Joomla 2.5.8.

General config is set to auto-create Joomla user and assign them to the Registered group.

Event config is set to auto-create (required).

Registration creates the Joomla user, but does NOT assign them to the Registered Joomla user group. Or any other group. So they can't log in.

This happens no matter what group assignment I have in the event. Which does not appear to be saving!

Any ideas?