OK with your script same issue failed to log in.. So i downloaded the enterprise wsdl and changed it to use that script and now it logs in .. so i tried that with my script and indeed it does log in.. (weird the partner wsdl file doesn't allow for logging in) But now with my original script i get error:

PHP Fatal error: Uncaught SoapFault exception: [soapenv:Client] Element {}item invalid at this location in /var/www/html/sf/soapclient/SforceBaseClient.php:457\nStack trace:\n#0 [internal function]: SoapClient->__call('query', Array)\n#1 /var/www/html/sf/soapclient/SforceBaseClient.php(457): SoapClient->query(Array)\n#2 /var/www/html/sf/creditor.php(42): SforceBaseClient->query('SELECT Creditor...')\n#3 {main}\n thrown in /var/www/html/sf/soapclient/SforceBaseClient.php on line 457, referer:

any suggestions on this?