On 0.7 there is no check that the username or email exists when a user registers (SITE/register).
When form is submitted no error is displayed too.
Sorry we didn't reply earlier. There's code to check this, and it worked when I tried it. There's probably an issue with username checking in some configurations though (issue #759).
If this still happens to you on current 0.7-dev, please comment / re-open this bug. I'd be pleased to investigate why it doesn't work for your system.