Found the bug, by comparing database.js file from another project where Argon2 is working.
Line 23:
if (passwordVerify && password.startsWith('$')) {
Should instead be:
if (passwordVerify && result[this.users.password].startsWith('$')) {
I have tried deleting and letting Wappler recreate the database.js file, but it still created the incorrect file. Changing this to Bug.