How do you make 2 codes(testing and power) without it not working?

The Input isn't changing for bad values because of your if statements. This is a lot easier to see if you use tabs correctly (this is your 2nd script with proper tabs):

code2 = "power" --type your code
code = "testing" --type your second code
local gear = game.ReplicatedStorage:WaitForChild('Sword')
Input = script.Parent.Parent.CodeInput
Output = script.Parent
Output.MouseButton1Down:Connect(function()
	if Input.Text == code2 then
		gear:Clone().Parent = game.Players.LocalPlayer.Backpack
		gear:Clone().Parent = game.Players.LocalPlayer.StarterGear
		if Input.Text == code2 then 
			Input.Text = 'Correct'
			wait (1)
			Input.Text = 'Enter'
		else
			Input.Text = 'Invalid/Used'
			wait (1)
			Input.Text = 'Enter'
		end
	end
end)

Now it is much more clear that:

• You are checking whether Input.Text == code2 twice
• The "else" will never run (it can only run if Input.Text == code2 for the first 'if' and then is changed by the time the 2nd one runs -- which can't happen)

The fix is to delete the 2nd if Input.Text == code then line and an end.

However, your scripts are messy -- you needn't have two slightly different scripts, each with all the codes in them, yet each only handling one of the codes. Instead, you can use a dictionary (or table).

Reference if you haven't used tables before: http://lua-users.org/wiki/TablesTutorial

Code:

local localPlayer = game.Players.LocalPlayer
local function AwardGear(gear) -- clones the gear to the player
	gear:Clone().Parent = localPlayer.Backpack
	gear:Clone().Parent = localPlayer.StarterGear
end
local function GenAwardGear(name) -- generate a function that awards the gear with the specified name
	local gear = game.ReplicatedStorage:WaitForChild(name)
	return function()
		AwardGear(gear)
	end
end
local codes = { -- each key is the code the user is to type; the value is the function to run if they enter it
	["power"] = GenAwardGear('Sword'),
	["testing"] = GenAwardGear('Handgun'),
	["say hello"] = function()
		print("hello")
	end,
	--etc
}
Input = script.Parent.Parent.CodeInput
Output = script.Parent
Output.MouseButton1Down:Connect(function()
	local func = codes[Input.Text]
	if func then
		func()
		-- You could prevent the code from being used again until the player rejoins the server with this next line
		-- codes[Input.Text] = nil
		Input.Text = 'Correct'
		wait(1)
		Input.Text = 'Enter'
	else
		Input.Text = 'Invalid/Used'
		wait(1)
		Input.Text = 'Enter'
	end
end)

Note that this script design is still poor - you should only give the player stuff on the server (unless this is a single player game). The GUI work (like MouseButton1Down) must be on the client, but it should then transmit what the user typed to the server and the server can determine whether it's a valid code or not (and what function to run, if any).