What is wrong with this script?

Your Problem

You're cloning the part on line 3, this is outside of the KeyDown event.. therefore making it so the part only clones once, rather than everytime you press the key.

Also, on line 8, you're trying to make an Instance type of 'Rocket'. This instance type does not exist! You have to clone a premade rocket.. which you did on the beginning!

How To Fix

Move the cloning inside the KeyDown event. This way, the part will clone whenever you press said key(:

Further Efficiency Changes

• Make The Script A LocalScript!!

By making this code a localscript, you can access the player by indexing LocalPlayer from Players like game.Players.LocalPlayer. Also, you cannot get the mouse of the client without a localscript

• Instead of using the KeyDown Event, use the InputBegan Event of UserInputService

The InputBegan Event can detect any user input.. meaning virtually any key on the keyboard.

Code

local Tool = script.Parent
local Bullet = Tool:FindFirstChild("Part")
--Player
local plr = game.Players.LocalPlayer
--UserInputService
local uis = game:GetService('UserInputService')

--Input Function
function Input(i)
	--Check key
	if i.KeyCode == Enum.KeyCode.E then
		--Clone Rocket
		local Rocket = Bullet:Clone()
		--Parent clone
		Rocket.Parent = workspace
		--Position clone
		Rocket.Position = plr.Character.Torso.Position
	end
end

function onSelected()
	--Connect function
	uis.InputBegan:connect(Input)
end

script.Parent.Selected:connect(onSelected)

If you want to make the code look cleaner.. use Anonymous functions!

local Tool = script.Parent
local Bullet = Tool.FindFirstChild("Part")
local plr = game.Players.LocalPlayer
local uis = game:GetService('UserInputService')

script.Parent.Selected:connect(function()
	uis.InputBegan:connect(function(i)
		if i.KeyCode == Enum.KeyCode.E then
			local Rocket = Bullet:Clone()
			Rocket.Parent = workspace
			Rocket.Position = plr.Character.Torso.Position
		end
	end)
end)