If you use email verification, it should get sent after the email is verified. If not, it should get sent right after registration.
Double-check that you saved and reuploaded register.php (I forgot to do this at first...

).
Other than that, I can't think of any reason why it wouldn't work...You said it appeared in the control panel, which is right. And it's set to yes, which is right.
Hmm...one thing to try. On lines 426 and 498, which should look like this:
Code:
mail ($newuseremail,$subject,$message,"From: \"$bbtitle Mailer\" <$webmasteremail>");
change it to this
Code:
mail($newuseremail,$subject,$message,"From: \"$bbtitle Mailer\" <$webmasteremail>");
I can't imagine that would make a difference, though...