in include/register.php find and comment out this code:
(!empty($states) && empty($b_state)) || empty($b_country) ||
Original
$fillerror = (empty($uname) || !empty($error) || empty($passwd1) || empty($passwd2) || ($passwd1 != $passwd2) || empty($firstname) || empty($lastname) || empty($b_address) || empty($b_city) || (!empty($states) && empty($b_state)) || empty($b_country) || empty($b_zipcode) || empty($phone) || empty($email));
Modified
$fillerror = (empty($uname) || !empty($error) || empty($passwd1) || empty($passwd2) || ($passwd1 != $passwd2) || empty($firstname) || empty($lastname) || empty($b_address) || empty($b_city) ||/* (!empty($states) && empty($b_state)) || empty($b_country) || */empty($b_zipcode) || empty($phone) || empty($email));
This code validates if you've selected or not state and/or country in your register form. So if you disable anything in register.tpl file you also have to disable validation checks in register.php because if you disable the state and the country from showing up in the Registration form, for register.php it means you didn't select anything and it won't let you complete registration process.
try this out, it should work