According to comments
If the userstatus is 0 you can use the account and if the
  userstatus = 1 you can't access the account because someone already
  used it
we should check for 3 cases:
- user / password not found (let's return -1asuserstatusfor this)
- user owns the account (userstatusis0)
- account belongs to some other user (userstatusis1)
Let's extract method: 
  // -1 Account does't exist 
  //  0 Account exists and belongs to the user
  //  1 Account exists and belongs to different user
  public int UserLogStatus(string login, string password) {
    //DONE: do not reuse connection, but create a new one
    using (var con = new MySqlConnection(ConnectionStringHere)) {
      con.Open();
      //DONE: keep sql readable
      //DONE: make sql parametrized 
      string sql = 
        @"select userstatus
            from png_users 
           where username = @prm_username and
                 password = @prm_password";  
      //DONE: wrap IDisposable into using 
      using (MySqlCommand query = new MySqlCommand(sql, con)) {
        //TODO: better create params explicitly, Parameters.Add(name, type).Value = ...
        query.Parameters.AddWithValue("@prm_username", login);
        query.Parameters.AddWithValue("@prm_password", pasword);
        using (var reader = query.ExecuteReader()) {
          if (reader.Read()) 
            return Convert.ToInt32(reader[0]);
          else
            return -1;
        }
      }
    }
  } 
And then you can use it:
  int status = IsUserLogged(txtboxUsername.Text, txtboxPassword.Text);
  if (status == 0) {
    MessageBox.Show("Either username or password is incorrect.", 
                    "THD FAM", 
                     MessageBoxButtons.OK, 
                     MessageBoxIcon.Error);
    return;
  } 
  else if (status == 1) {
    MessageBox.Show("This account is currently online, you forgot to logout. Please approach administrator for help. Thank you", 
                    "THD FAM", 
                     MessageBoxButtons.OK, 
                     MessageBoxIcon.Error);
    return;
  }
Warning! Do not store passwords as plain text. If someone steal the table all the users will be compromised. Store password hashes instead. When logging on, user must provide a string (password), such that
  HashFunction(password) == StoredHash
where HashFunction is one way function: easy to compute (i.e. it's easy to find HashFunction(password) value), difficult to reverse (i.e. it's almost impossible to find a sting such that HashFunction(password) == given value)