This may happen due to the temp directory
path or log directory
invalid path.
check the path of those folders from your global configuration and make sure the path is correct and those folders have write permission too.
If this not solve your problem try to comment this line..
$this->triggerEvent('onUserLoginFailure', array((array) $response));
on libraries/joomla/application/application.php
Also about the activation link issue may get fixed with these.
Hope this will fix the issue.