That is not a bug with this mod. This mod simply sends header and stylesheet. It has nothing to do with login's
I would suggest you post in the photopost forums this as it is an issue with their threads login integration that simply pulls login password without checking the U_Approved field.
If you want to change the link for login to the threads page you can edit pp-inc.php and look for login.php path and change it to the threads path not photopost's
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