You don't want to read files twice, use
echo -a $nick $iif($read(levels.txt,s,$nick),has a level of $v1,doesn't have a custom level)
btw theguy0000, you know that mIRC has a built-in userlist? Just type /help User List to see some info about it.
mIRc has no arrays, but hash tables are the closest thing. Or just use the read options like RusselB.