Manual accounts
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This authentication method requires the administrator to manually create all user accounts. It may be used together with the upload users tool (Site admin > User > Accounts) which uses a text file.
Can you arrange for an e-mail to be sent to notify Users of new accounts?
If you are creating ONE manual account, then no.
See Feature request here: http://tracker.moodle.org/browse/MDL-19390
See discussion http://moodle.org/mod/forum/discuss.php?d=117005
Bulk upload can be set up to send e-mails: see the discussion here: http://moodle.org/mod/forum/discuss.php?d=85333 (Which includes a code hack to do this as well. (Also http://moodle.org/mod/forum/discuss.php?d=125000)