by Ken Task.
Don't think I've ever seen any config screen/setting in a 'stock' Moodle (no addons) that set a default username and default password when creating a new user manually. Maybe it's your browser settings - did you check the box for remembering login/pass?
Have access to another browser or machine that you've not used as a Moodle Admin? Try the other browser/machine and see if behavior is the same.
As far as bulk user uploads ... not sure the two are related ... just what error are you getting? (turn on debug)
'spirit of sharing', Ken