No, you're talking about the "Forgot password" process. But when you try to login and the login fails with a "Password expired" error you should get a screen identical to the login screen but with four text fields: the top two are username and old password fields, and the bottom two are the new password and repeat password fields. Do you see that screen when you get the "Password expired" error?
Also, as a quick fix to your problem (not to the bug) you can go to Administration / Configuration / Passwords and set "Block account on password expiration" to "No" (obviously, with another admin user since you can't login). If you can't do this through the app you can run the following SQL:
UPDATE `og_config_options` SET `value` = 0 WHERE `name` = 'account_block';