1) Passwords can be specified when members are imported (within the Excel file)
2) When member applies online or added by administrator, password is automatically generated and sent to member's email
3) Finally - which is probably the best thing in your case as you have already imported members - ask them to use 'Forgot password' link to retrieve their password using their email.
We will be making member password thing a bit more clear soon, we know it is a bit hidden now.
Dmitry Buterin, Chief Apricot