Maybe I'm misunderstanding, but if the users were already registered, then it wouldn't ban them to begin with. Only the Registration Prevention moves to a specific Usergroup, which is normally the Prevention Usergroup, but if Banned Account Check is enabled and you have the Primary Banned Usergroup set correctly, they will be banned and moved to the Primary Banned Usergroup.
It will not reban someone if they simply login - that feature may appear in version 2.0.
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