use index.php code in other php files

I'm trying to create simple login/registration page.

I'm using index.php which includes login.php in it.

I want to report the login errors in a specific position, using an answer to a preious question.

The problem is that if I encounter an error, the url changes to the login.php file and on next login I get error of "Cannot find page".

I want to eventually be able somehow display errors and be able to get another input and handle it.

login.php:

   <?php

    $host="localhost"; // Host name 
    $username="root"; // Mysql username 
    $password=""; // Mysql password 
    $db_name="kupon"; // Database name 
    $tbl_name="users"; // Table name 

    // Connect to server and select databse.
    mysql_connect("$host", "$username", "$password")or die("cannot connect"); 
    mysql_select_db("$db_name")or die("cannot select DB");

    // username and password sent from form 
    $email=$_POST['email']; 
    $password=$_POST['password']; 

    // To protect MySQL injection
    $email = stripslashes($email);
    $password = stripslashes($password);
    $email = mysql_real_escape_string($email);
    $password = mysql_real_escape_string($password);
    $sql="SELECT * FROM $tbl_name WHERE email='$email' and password='$password'";
    $result=mysql_query($sql);

    // Mysql_num_row is counting table row
    $count=mysql_num_rows($result);
    // If result matched $email and $password, table row must be 1 row
    if($count==1){

    // Register $email, $password
    $_SESSION['email'] = $email;
    $_SESSION['password'] = $password; 
    header("location: members.php");
    }
    else {
       $error = '<p class="error">User does not exist</p>'
       include('../index.php');
       exit;
    }
    ?>

index.php form:

                <form action="php/login.php" method="post" class="form">
                    <p class="email">
                        <input type="text" name="email" /> :דואר אלקטרוני</br>
                    </p>
                    <p class="password">
                        <input type="password" name="password" /> :סיסמא</br>
                    </p>
                    <p class="submit">  
                        <input type="submit" value="היכנס" />  
                    </p>  
                </form>
                <?php
                    if(isset($error)) echo $error;
                ?>