////index.php/////
/////////////////
<?php
require_once('config.php');
require_once('inc/style.css');
include('inc/functions.php');

if(is_logged_in()) /** Use function is_logged_in  */
{
echo 'hello';
} else { /** If is_logged_in is not set: ELSE  */
    require('inc/login.php');
}
?>

////functions.php/////
/////////////////////
function is_logged_in() /** Checks if user is logged in */
{
    $islogged = false; /** Set variable FALSE  */

    if (isset($_SESSION['username'], $_SESSION['password'])) { /** If username/password isset */
        $islogged = true; /** If username/password isset: variable TRUE" */
    }

    return $islogged; /** Return TRUE or FALSE */
}

////login.php/////
/////////////////
<?php
 if($_GET['do'] == register){
    include('inc/register.php');
}else{

 ?>
<div id="login">
<form name="login" method="post" action="">
Username:
<br/>
<input type="text" name="username" id="username" class="textfield">
<br/>
Password:
<br/>
<input type="password" name="password" id="password" class="textfield1">
<br/>
<input type="submit" name="login" value="Login" class="submit">
</form>
<a href='?do=register'>Register now!</a><br/>
<?php
    if (isset($_POST['login'])) {
        $username = $_POST['username'];
        $password = (md5($_POST['password']));

        $query = "SELECT * FROM users WHERE username = '$username' AND password = '$password'";
        $result = mysql_query($query);
        if (mysql_num_rows($result) > 0) {
            $_SESSION['username'] = $_POST['username'];
            $_SESSION['password'] = $_POST['password'];
            redirect('index.php', '0');
        } else {
            echo 'Wrong information.';
        }

    }
}
?>
</div>