Corrected versions as I see 'em below:
Code:
<?PHP // Always use <?PHP to open tags, there's a reason PEAR compliance requires it.
$user = "XXXXX";
$pass = "XXXXX";
$db  = "XXXXXX";
$myserver = "XXXXX";

$connect = mysql_connect($myserver, $user, $pass) or die("Connect");
$select_db = mysql_select_db($db) or die("DB Selection");
?>
Code:
<?PHP
session_start();
include "inc/connect.php";
if ( !empty($_POST['username']) && !empty($_POST['password']) ) 
{
	$username = $_POST['username'];
	$password = md5($_POST['password'];
	$username = htmlspecialchars($username);
	$username = stripslashes($username);
	$query = "SELECT * FROM tblUsers WHERE userName = '".$username."' AND userPassword = '".$password."'";
	$result = mysql_query($query);
	$numResult = mysql_num_rows($result);
	if ( $numResult == 1) 
        {
		$userInfo = mysql_fetch_array($result);
		$_SESSION['sessionID'] = $userInfo['userID'];
		header("Location: http://www.xxx.ca/next.php");
                exit;
	}
}
else 
{
        header("Location: http://www.xxx.ca/index.php");
        exit;
}
?>
If you can read this, PHP is not being parsed correctly.
Personally, I've long been a fan of PEAR::DB both for portability across backends, as well as its error handling. There are other steps I would personally take here to ensure that the data is being sanitized, but I've covered that here before. :)