Homotopy Lemma Let $f, g : M \to N$ be smoothly homotopic maps between manifolds of the same dimension, where $M$ is compact and without boundary. If $y \in N$ is a regular value for both $f$ and $g$, then $$\#f^{-1}(y) = \#g^{-1}(y) \ \ \ \ \ (\text{mod}\ 2)$$
Now in his proof there's a line that says the following,
But we recall from Chapter $2$, that a compact $1$-manifold always has an even number of boundary points.
I don't see why this is true, the circle $\mathbb{S}^1$ is a compact $1$-manifold, and it seems to have infinitely many boundary points.
Futhermore, the result that Milnor seems to be quoting, is the classification of $1$-manifolds in the appendix of Topology from the Differentiable Viewpoint. However that result requires, $M$ to be connected, however that is not one of the required conditions on the Homotopy Lemma.
Is this an error in the book? (Also I'm not sure that Chapter $2$ contains the result that Milnor is quoting).
Boundary of a manifold with boundary is different from the topological boundary. This is a crucial point. A circle is a manifold without boundary, hence has $0$ boundary points.
The classification of $1$-manifolds tells you that a connected, compact $1$-dimensional manifold with boundary is either a closed interval or a circle. This then tells you what the components of a general compact $1$-dimensional manifold with boundary must be.