Ok, this is kind of old "news" but Laura Harring commented a while ago that there were plans of a sequel link here:

http://www.nbcmiami.com/blogs/popcornbiz/Mulholland-Drive-Star-Believes-a-David-Lynch-Follow-Up-Is-Being-Born-90248057.html

OK, I think this isn't gonna happen, BUT... what if? how could the story continue? how would YOU do a sequel of this film?

I can't even begin to imagine how a sequel could be made. Not in any strict sense anyway. I think the main problem would be that it might give more away about DL's intentions with MD than he obviously would like to. If he picks up with any characters that only seem to appear in the first part of the film that would arguably mean that we'd have to reconsider any beliefs that we have that they're characters from a dream.

I'd love to see Justin Theroux or Laura Harring or Naomi work with David again and I don't think that's beyond the realms of possibility, but INLAND EMPIRE kinda sits as a companion piece to MD in many ways already. A third with similar themes would mean that the films would sit as a kind of triptych, and given his love for Francis Bacon and Bacon's famous paintings of that kind it would seem possible that we could get a third film.

But Laura cleared the sequel rumour up shortly after the comments you linked up there when she said:

"You know what? I didn’t mean to do that. The truth is that David is always creating, and I’m in constant touch with him and his wife Emily. We just have such a good time. I didn’t mean to say what David is doing or not doing, but we definitely have talked about collaborating in the future. We’ve talked about it several times. I’ve heard a piece of music that I believe could be…[long pause] in one of his films. Please don’t get me in trouble, Kyle!"

I'd love to hear some firm information that he's working on a feature again though.