mysql_fetch_array not working

Use $sql = mysql_query($query) or die (mysql_error()) to check if there's something going wrong with the query.

Alternatively, you could try mysql_fetch_assoc (since I see you're most using associative arrays), to rule out a possible 'bug' of mysql_fetch_array (I doubt that but you could give it a try).

And check that $email is not empty. If it's passed through a sanitizing function (as it should have before being put into the query), see if that function have actually returned a value or just NULL or an empty string.

And, btw, why are you using a while loop? Are you supposed to get more than one record (and passwords) with the same e-mail address?

One thing to check real quick would be PHP and MySQL version on your computer versus the web server. How are you handling the hashes, because that could also cause an issue.

Are you doing something like the following?

$password = md5($password);

If so, are you converting correctly on the web server side?

$password = $_POST['password'];
$passwordHash = md5($password);
unset($password);

$query = "SELECT * FROM users WHERE user='$email'";
$sql = mysql_query($query);
    while($r = mysql_fetch_array($sql)) {
        echo $r['email'];
        echo $r['passwordhash'];

        if($passwordHash == $r['passwordhash']) {

            $_SESSION['user_id'] = $email;
            echo "started session";
        }
        else {
            echo "Incorrect password or email";
        }       
    }