If I go to my website and click login. It prompts username and password, if you ten enter your username and click the link "If you have forgotten your password click here" it then displays your password hint, this far so good. However if that does not help the next message says "Click here and we will email instructions to change your password" If you click this you receive a blank email.

Firstly where do I set the response so that the customer actually receives some sort of intelligent reply?

Personally I would rather have some sort of workflow so that the customer can retrieve or re-set their own email. As far as I can see there is no way for a customer to reset or retrieve their password if they have forgotten it they have to call the sales office and ask a salesman to set a temporary password. In which case why send them an email at all why not simply display a message on the screen to say you can re-set the password call the sales office?