the $avoid_w3all_password_check global var can be used to avoid the default WordPress check password overwrite. Set to 1 to activate it. Maybe put it into the custom code file

global $avoid_w3all_password_check;  #maybe required
$avoid_w3all_password_check = 1;

More useful global vars to be used:

$avoid_w3all_password_check 
$w3all_phpbb_connection
$phpbb_config
$w3all_phpbb_usession
$w3all_phpbb_profile_fields