....
### my $newdir= 'c:\redone';
my $newdir= 'c:/redone'; 
my $extension= ".txt";
## I would be tempted to take the preceeding 2 statements out of the loop

my $target = "$newdir/$line";
open( FINAL, ">$target" ) or die "Can't open $target:$!";

#output database results
### while (@row=$sth->fetchrow_array) {
while (@row=$sth->fetchrow_array()) {
...