I never noticed/knew there was reset pw switch, but this has never been an issue before (I assume it was switched to no).
Reset Password in backend is defaulted to Yes when creating a new user. Have added a bug ticket as it should be defaulted to No.
forge.joomlapolis.com/issues/7228
Why can't the user and admin change the pw and why doesn't it go to the CB user page to allow change (it would not leave the K2 user page)?
The user and admin should be able to change their password perfectly fine. I'm guessing you're not able to because something installed is intercepting the attempt and redirecting away. Sounds like K2 failed to create its K2 user and is why it keeps redirecting away. Try unpublishing "User - K2" in Extensions > Plugins.