I suggest also go away from the site and clear all web browser cookies (it won't clear the cookie if the site is currently open in the browser).
Even with clear text and hashed password the machine key is used to encrypt the authentication token in the cookie so you need to clear the cookie and get a new one.
With encrypted passwords the machine key is also used in the encryption so it will lock out users if you change the machine key with encrypted passwords. Generally once you have a custom machine key you should never change it when using encrypted password unless you think it has been compromised, in which case you should change to clear text first, then change the machine key, then change back to encrypted. Still even then it is possible some user rows won't be corrected especially if it is a lot of rows, it could time out. For this reason I think hashed is the best way to keep thing secure and reliable even if the machine key is later changed.
The built in machine key generator is only shown if the current machine key is the default machine key which is in our source code and public and therefore should never be used in production. You can use a different copy of mojoportal on a local dev machine to generate machine keys, it does not matter what machine is used to generate one.