When you get the initial redirect to the login page, enter a new set of credentials and hit ENTER. You should see an error indicating unknown user. This step should be inserted between 2 and 3 in your numbered list above.
Now, click the register link
where are you redirected upon completion of registration?
I haven't added or changed any of the pages that process the new-user.
The minimal example I included above goes into /www/register because the system treats return_url differently if you're entering along that vector. However, it's not required to illustrate the problem.
Can you give me a url (that I can reach) to a page requiring authenticated access on a 5.0 server? Once authenticated, the page should be displayable without requiring membership in any special groups. I'll try to reproduce this issue and give you the exact blow-by-blow click sequence so you can reproduce it also.