Well, looks like I finally fixed it after a few minutes. I don't know why it kept happening this way but I had the latest Superuser, which I had installed it manually several times, but it kept bringing up an old version of Superuser. I kept trying to update it to a newer one but it kept failing to update. Then oddly it said I had the latest version installed but it didn't look the same as the one I had when on CM7. So I had to go to Root Explorer, do a complete search of Superuser and apparently there was more than 1 old version of Superuser even though I had already put a fresh copy (latest version) on the SD Card. So I just went ahead and deleted every single Superuser.apk I could find. There should have only been 2 (old version and latest version). Once done, I put the latest one on the SD Card, rebooted, reinstalled and it finally came up with the new version.
The problem that kept confusing me was that I did not install the old version, even when Superuser wasn't even installed. I would then install the latest version and kept getting the old version of it. I have no idea why it kept doing that so by deleting all trace of it, it finally allowed the latest version to take over which allowed me to enable Root by default and solve all the problems (even being granted su permission in the Emulator).
What a pain in the arse.