I've dig it up and the bug exist on other versions as 3.2.1
Basically when a new user registers, they are entered into the newly registered group. In the phpbb_users table, there is the user_new and upon registering it has a value of "1":
As long as this value is "1" remove_newly_registered($user_id); will work.
What happens is this, if a user is removed at any time from the newly registered group (automatically or manually by admin), the value "1" in the user_new column is changed to a "0". When a user is put back in the newly registered user group (automatically or manually by admin), the "0" does not revert back to a "1" and so remove_newly_registered($user_id); will not work.