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@khuhner - sorry I didn't reply sooner, staying busy.
The '$username = ...' statement is for use in a php file (where all the programming and logic goes). It, in turn, will pass information to the html files that display your pages.
<{$xoops_uname}> is a smarty variable that can be used in module and block html files like text. I hadn't tried it in a custom block, but when I did, I found it wasn't being interpreted correctly. Adding it to another block by editing it's template did produce the desired results.
Perhaps someone more knowledgeable about how the custom blocks are generated by XOOPS can explain what needs to be done to display smarty tags in custom blocks.