Edit:
I got it to work but how come when I register a new user, the user isn't placed into the default group. Instead, he is placed into no group with no permissions. I have only users can post comments turned on and people still can't comment when they register.

Did you tell register user to assign the default group to users it registers? The user should be assigned to whatever you choose, but normally he has no rights until he verifies, then is assigned based on the plugin options.