The mod allows login when using official channels (eg., #ThePixelShadow) but not when hosted in an unofficial channel (eg., ##ThePixelShadow-Lego).
"The server needs to be in its channel for anyone to log in."
The server is in the channel.
http://freenode.net/news/registering-a-channel-on-freenode
The short version is that official channels (also known as primary channels) are named starting with one #, unofficial (topical or about channels) start with ##. If your channel is not an official one, please use ## at the start of the channel name, or you may be asked to move.
The mod allows login when using official channels (eg., #ThePixelShadow) but not when hosted in an unofficial channel (eg., ##ThePixelShadow-Lego).
"The server needs to be in its channel for anyone to log in."
The server is in the channel.