How to inject postal address into user entity via custom registration form
I managed to figure out the problem. Apparently you can't load the new user array with the position of the array where the address fields are located. Instead you have to load the address array into a new variable, and pass THAT into the "field_postal_address" entity field.

So, in my solution, I loaded the address array into the $ary_address array. Then I passed that into the postal address array.

$ary_address = $form_state['values']['address']['address'];

$edit = array(
    'name' =&gt; $form_state['values']['name'],
    'field_fname' =&gt; array(LANGUAGE_NONE =&gt; array(array('value' =&gt; $form_state['values']['field_fname']))),
'field_lname' =&gt; array(LANGUAGE_NONE =&gt; array(array('value' =&gt; $form_state['values']['field_lname']))),
    'pass' =&gt; $form_state['values']['password'],
    'mail' =&gt; $form_state['values']['mail'],
    'init' =&gt; $form_state['values']['mail'],
    'field_postal_address' =&gt; array(LANGUAGE_NONE =&gt; array($ary_address)),
    'status' =&gt; 1,
    'access' =&gt; REQUEST_TIME,
);
$newUser = user_save(drupal_anonymous_user(), $edit);