well, if that is literally your exact script...
try wrapping your raw strings in quotes, and use echo, like so (you've also got your ?> in the wrong place):
<?php
if ($username=="Dylan")
{
echo "hello you may contniue";
}
else
{
echo "sorry please go back";
}
?>
<form action="password.php" method="POST">
<input type="text" name="username" value="enter">
...