KeyDown script will not activate?

I recommend you to fix:

• First Script - Lines 1 & 2, line 10, & lines 14-16

• Second Script - Lines 5-8

#FIRST SCRIPT

• Lines 1 & 2 - Local scripts are fast, because they run from the client (you). Because they are fast, this script will run before the local player is defined, so player will come up "nil". Because of this, character models may come up "nil" also (error for character model should show up in the output, unless this was tested in solo mode).

repeat
	wait()
until game.Players.LocalPlayer
Player = game.Players.LocalPlayer
Character = Player.Character
if not Character then
	Character = Player.CharacterAdded:wait() -- This is added to wait until the character model is not nil.
end

• Line 10 Optional - I'd use enumerations.

hole.FormFactor = Enum.FormFactor.Custom

• Lines 14-16 - I wouldn't name a variable as "script", because "script" by default is the running script itself. I'm not sure if the code will execute if you leave it as is. Rename it if you, too, are unsure.

local DamageScript = script.Script:Clone()
DamageScript.Parent = hole
DamageScript.Disabled  = false

#SECOND SCRIPT

• Lines 7 & 8 - We don't know yet if the entity that touched the hole has arms/legs. A character model can still function without them.

local RightLeg = toucher.Parent:FindFirstChild("Right Leg")
if RightLeg then
	RightLeg.CanCollide = false
end
local LeftLeg = toucher.Parent:FindFirstChild("Left Leg")
if LeftLeg then
	LeftLeg.CanCollide = false
end

repeat
	wait()
until game.Players.LocalPlayer
Player = game.Players.LocalPlayer
Character = Player.Character
if not Character then
	Character = Player.CharacterAdded:wait()
end
Mouse = Player:GetMouse()

DamageScript = script.Script

Mouse.KeyDown:connect(function (key)
	key = key:lower()
	if key == "z" then
		local Torso = Character:FindFirstChild("Torso")
		local hole = Instance.new("Part", Character)
		local holemesh = Instance.new("CylinderMesh", hole)
		hole.FormFactor = Enum.FormFactor.Custom
		hole.Anchored = true
		hole.CanCollide = false
		hole.BrickColor = BrickColor.new("Really Black")
		local DamageScriptClone = DamageScript:Clone()
		DamageScriptClone.Parent = hole
		DamageScriptClone.Disabled = false
		game.Debris:AddItem(hole, 2)
		if Torso then
			Torso.Anchored = true
			for i = 1, 100 do
				hole.Size = Vector3.new(i, .2, i)
				hole.CFrame = Torso.CFrame * CFrame.new(0, -2.8, 0)
				wait(.025)
			end
			wait(.025)
			Torso.Anchored = false
		end

script.Parent.Touched:connect(function (hit)
	local Victim = hit and hit.Parent
	local Humanoid = Victim and Victim:FindFirstChild("Humanoid")
	if Humanoid then
		if Victim.Name ~= script.Parent.Parent.Name then
			local Torso = Victim:FindFirstChild("Torso")
			local RightLeg = Victim:FindFirstChild("Right Leg")
			local LeftLeg = Victim:FindFirstChild("Left Leg")
			if RightLeg then
				RightLeg.CanCollide = false
			end
			if LeftLeg then
				LeftLeg.CanCollide = false
			end
			if Torso then	
				Torso.Anchored = true
				Torso.CanCollide = false
				for i = 0, .5, .1 do
					Torso.CFrame = Torso.CFrame * CFrame.new(0, -i, 0)
					wait(.5)
				end
			end
			Humanoid.Health:TakeDamage(25)
		end
	end
end