The problem is on the encryption function.
Smf uses sha1, and joomla uses md5. That is because user cant login. The password cant be de-encrypted ( from Sha1-SMF ) and then encrypted with md5-JOOMLA.
The solution is that your users use "Forgot password". Then a password wil be generated. With that passw they login at joomla, an uses "Edit Profile" (buttom from CB ) and change they passw as they like.
Once changed,in order to passw work on two systems Joomla and SMF. They need to logout an login again at Joomla, with the new password.

Hope, i help you!
Regards!

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