When people log in with the wrong credentials they are automatically taken to the wordpress login page. See link: http://screencast.com/t/h8MYJruWM
How do I avoid this?
Also, when logging in using wordpress the numbers you type in the CAPTCHA (in this case -7 = 2) is white. You can't see that you are typing the number, but it works. How do I change this color?
Well right now wplms posts the login credentials to the wordpress wp-login.php file and that is why when the credentials are wrong the error is shown on wp-login.php .
Avoiding this is not available as of now in wplms .
For captcha please try adding the given css from wp-admin-> wplms -> miscellaneous -> custom css for wp-admin screen :
.login form .input, .login form input[type=checkbox], .login input[type=text] {
color: #444;
}