When I test it for the user it works, so I'm sure it isn't a problem with Xenforo. However, it is a problem with the users looking at the letters and typing them in by hand.
In gmail and in the emails sent out by Xenforo, both the letter l and letter I look identical.
Obviously on this forum the letters are visibly different. But check out this screenshot. You literally can't tell.
From this screenshot the password is: XlLxsIAo
But you sure can't tell! It would be great if Xenforo could avoid those two letters in passwords or change the font so that they are visibly different. This process should be easy and straightforward for the user. The current method is anything but... and yes, cutting and pasting would fix the issue but for some of these members that may be too difficult... and lets face it. You should be able to tell the different letters apart.