Membership Signup (account disabled by default)

So when a user signs up I want there account to be disabled until I give them permission. I found this in the user_signup.php

mysql_query("INSERT INTO `{$TABLE_PREFIX}" . @$GLOBALS['WSM_ACCOUNTS_TABLE'] . "` SET
fullname = '".mysql_escape( $_REQUEST['fullname'] )."',
email = '".mysql_escape( $_REQUEST['email'] )."',
username = '".mysql_escape( $_REQUEST['username'] )."',
password = '".mysql_escape( $passwordHash )."',
businessname = '".mysql_escape( $_REQUEST['businessname'] )."',
disabled = '1',
createdDate = NOW(),
updatedDate = NOW(),
createdByUserNum = '0',
updatedByUserNum = '0'")
or die("MySQL Error Creating Record:<br/>\n". htmlspecialchars(mysql_error()) . "\n");
$userNum = mysql_insert_id();

I changed disabled to "1" from 0 thinking it would default it to disabled. It seems to work but when I login to the admin and look at the temp member I created the box isn't checked disabled but It also won't let me login. So it acts like the account is disabled. So am I doing this correct?

Also is there a way that the user can set there own password from the start? VS having to get the temporary password and having to change it so something they choose?