[eluser]adityamenon[/eluser]
This is very probably an issue of the server unable to send emails, rather than CI or IAuth. A suggestion: replace with $config['use_ci_email'] = TRUE, and save a file called email.php inside application/config/ and autoload the email library within application/config/autoload.php
Then write a little file to test the CI email functionality. Use $this->email->print_debugger(); to know what's going wrong...
If nothing is going wrong, the next time you try to register the emails should go out properly.
