You didn't link the function 'steppedOn' with the Touched event!
This is how you use the Touched event: SP.Touched:connect(steppedOn)
Add the line above to your code and it should work just fine!
However, that while loop should loop forever since there is no 'break' to it. To counter this problem, you must add 'break' with an if statement checking: if the player's health is greater than 0, take 1 damage; otherwise, break the loop since it has no use anymore. This is how:
2 | if Parent.Humanoid.Health > 0 then |
3 | Parent.Humanoid:TakeDamage( 1 ) |
Also, you should use Debounce to prevent overlapping the damage.
http://wiki.roblox.com/index.php?title=Debounce