Membership Plugin Not Going to Step 2 in registration process

Hello Guys,

Attempting to get my site setup with the membership plugin.

I'm pretty sure that all of the rules are working the way I want, but I can't seem to get the actual registration to work properly.

I have three level:
Guest - no access to buddypress features
Gold Member - access to buddypress features, cannot create blog
Platinum Member - access to buddypress features, can create blog, is supporter

On the registration page:

When you fill out the form and click "Sign Up"

the form just reloads and doesn't go on to step 2 where a user would select their membership and pay.

The user is created in the backend and they are sent their password. However they are Inactive and have no subscription or membership level. When trying to login, they get the message "You Account Is Not Active"

How do I fix this?

I'm on WP 3.2
Latest version of Membership and Supporter
Using Multi-Site on Sub-Folder
Gateway is and is currently in sandbox mode. Please feel free to try and sign up for an account to see what I mean.