I found the solution in the meantime here:
http://www.dotnetnuke.com/Resources/Forums/forumid/108/threadid/403147/scope/posts/threadpage/1.aspx

As a summary, I changed these:

1)
Admin -> Site Settings -> Advanced Settings -> Security Settings
I have set User Registration to "None"
- the "Register" link disappeared (the "Retrieve Password" link still remained)

2)
\Website\Portals\_default\default.css
entered:
#dnn_ctr_Login_liPassword {display:none;}
- it hided the "Retrieve Password" link

3)
I also went to web.config and set these to false in line 251 (they were true):
enablePasswordRetrieval="false" enablePasswordReset="false"
- but I am not sure how much effect this has, since I already disabled the "Default Authentication" extension.

Thanks Sebastian for your help.

> 3) will effect default DNN Authentication Provider only
Actually I installed a 3rd party Authentication Provider from iowacomputergurus.com. It is called External Database Authentication provider. After I configured I had 2 login tabs, one from DNN and one from this new one.
After I made some customizations and made sure I can log in using my 3rd party membership database, I disabled the Defatult Authentication from DNN and it doesn't show 2 login tabs anymore, but it seems that for the login window customizations I still have to customize the DNN files

Thanks for the info from your blog post. I realized that whatever you enter in the Admin / Site Settings / Stylesheet Editor tab, it goes to \Website\Portals\0\portal.css file. It was much faster to adjust the values in that file and refresh the screen instead of doing in DNN Stylesheet Editor (login and logout many times)

Using your CSS code, I was able to control the login position in popup, but not the login module width and height (actually you didn't mention the height)

I analyzed with Firebug and this is a code generated wher it shows inline styles for the width and height. I don't know where that code is generated from:

< iframe scrolling="auto" frameborder="0" src="http://localhost/login.aspx?ReturnUrl=%2fgettingstarted.aspx&popUp=true" id="iPopUp" style="display: inline; width: 389px; min-height: 334px; height: 389px;" class="ui-dialog-content ui-widget-content" >< / iframe >