I sent my application on end of July, and got the old passport, nagarikta, and new PP back on mid-Nov.

I think the way it works is
- The embassy waits for a certain number of applications, checks them and send them in bulk to Kathmandu.
- After the Ministry of FA receives it in Ktm, it updates their website with the info in the "Received" section. It took around two months for my name to appear on MOFA page.
- Then they will process and send the new PP back to embassy and your name appears in "Dispatched" section.
- It took me another month and half to receive the passport, after my name came on the Dispatched section.

I called the embassy once, and the person who answered was helpful enough to look up my information, and let me know that the passport had arrived and they would be mailing in a couple of weeks.

Hopefully this helps mangale..