I was seaching the web to find a solution to the exact same problem were having( the drop down menus). I was taking a look at your final code and noticed that $row is not being set to each row of the query. I have been able to get my code to work by making a similar change.
<?
$conn = mysql_connect('localhost', 'user', 'password') or die(mysql_error());
$db = mysql_select_db('database', $conn) or die(mysql_error());
$sql = "SELECT username FROM phpbb_users";
$res = mysql_query($sql, $db) or die(mysql_error());
echo '<select name="blah">';
while ($row = mysql_fetch_row($res)) {
echo '<option value="' . $row[0] . '">' . $row[1] . '</option>';
}
echo '</select>';
?>
My code not a bit different that this so if this does not work I can send you what I have