where I was told by a very nice lady that Poland doesn't issue passports to foreigners.
Rightly so and which country will give it's passports to foreigners my dear? You have to write a letter of intending to aquire polish citizenship within 6months of receiving your permit to settle and from there they will tell you what documents to bring in. Nowadays they try by all means to give a decision with in 3months if all documents are in order.