Membership Pop-Up Error - user trying to sign up - After Upgrade today

Older version of plugin was working fine
( Dec 2012 version ) with 3.5 and PayPal express. Live / Actual signups were no problem.

I updated the Membership plugin to 3.4.2 today (using wp 3.5 and BP 1.6.2). Shortly thereafter I began to get blank New user registration emails.

Upon investigating and creating several test accounts where I actually tried to sign up, I found that the no matter what I did in the initial registration pop-up, after entering a username, email and password twice and hitting submit > a red error bar would appear in the top of the popup and say "Sorry this account is not active". And of course no way to continue to PayPal to complete the transaction. As soon as this happened, the system would send the blank user Registration email and would also log the person in MySQL table wp_users. Without deleting them from the wp_users table directly, the email and/or username would become "spoken for" and never be able to be used.

It seems like the upgrade has caused a bug with the actual signup process!

I also noticed the upgrade made a few of my users inactive and removed their membership levels and permissions?

Any way to roll-back to the previous version or known fixes for these issues?

Please advise asap

Thank You -
Jon