Depending on your PHP Version 4.3 or higher you should be using
$_SESSION['userid'] = $userid;
etc.
And secondly..
The way you are doing it should be like this
<?php
session_start();
extract(mysql_fetch_assoc(mysql_query("SELECT password FROM users WHERE id = '$id'")));
$userid = $id;
$pwd = md5($passwd);
session_register('userid');
session_register('pwd');
if($password == md5($passwd)) {
$valid_user = 1;
echo "Right.";
?>