@Chris
- First ensure there is at least one K2 User Group inside K2. By default you should see 2. If you don't, create one and while creating it, configure the frontend editing permissions and for which categories these permissions apply.
- Ensure that Frontend Editing is enabled in K2's settings.
- In K2 Users, assign users to the K2 User Group you previously edited (or created).
- Publish the K2 User module somewhere in the frontend. It's the module that includes editing actions for users with the right permissions.

K2 User Group permissions work side-by-side with Joomla's permissions and control ONLY frontend editing.

There is an option in K2 Settings (under the "Site" tab if I recall correctly) which allows you to set a default K2 User Group for every signup. Enabling that however will have K2 take over the signup process (which allows for gathering more info from a user).

The module for login & frontend editing is "K2 User" and NOT "K2 Users" (notice the trailing "s") which is what you configured.