How to auto update this Code?

You seem to have a 'non-perfect' event ;p

The '.Changed' should only be used when there aren't any events for that case. In this case, we got an event called 'CharacterAdded'

Let's change the code:

newPlayer.Changed(...)

-- Delete that. :)

Now we need to make it actually connect the event, so we got the final code of:

game.Players.PlayerAdded:connect(onPlayerRespawned)
function onPlayerRespawned(newPlayer)
    wait(1)

        gui=Instance.new("BillboardGui")
        gui.Parent=newPlayer.Character.Head
        gui.Adornee=newPlayer.Character.Head
        gui.Size=UDim2.new(3,0,3,0)
        gui.StudsOffset=Vector3.new(0,2,0)
        local text1=Instance.new("TextLabel")
        text1.Text = ("Level:"..newPlayer.leaderstats.Lvl.Value)
        text1.FontSize = "Size14"
        text1.TextColor3 = Color3.new(170, 0, 0)
        text1.TextStrokeColor3 = Color3.new(0, 0, 0)
        text1.TextStrokeTransparency = 0
        text1.Size=UDim2.new(1,0,1,0)
        text1.Position=UDim2.new(0,0,0,0)
        text1.BackgroundTransparency = 1
        text1.Parent=gui
end

function onPlayerEntered(newPlayer)
    --[[newPlayer.Changed:connect(function (property)
        if (property == "Character") then
            onPlayerRespawned(newPlayer)
        end
    end)]]--
    newPlayer.CharacterAdded:connect(function(char)
            onPlayerRespawned(newPlayer)
    end)
end
game.Players.PlayerAdded:connect(onPlayerEntered)

But now we face a dillema: WE WANT IT TO AUTO UPDATE!

For this, make a new LocalScript in Backpack. Now change this to the code:

function onPlayerUpdate()
    wait(1)

        if (game:service('Players').LocalPlayer.Character:FindFirstChild('Head')~=nil) then
        if (game:service('Players').LocalPlayer.Character.Head:FindFirstChild("BillboardGui")==nil then
        gui=Instance.new("BillboardGui")
        gui.Parent=game:service('Players').LocalPlayer.Character.Head
        gui.Adornee=game:service('Players').LocalPlayer.Character.Head
        gui.Size=UDim2.new(3,0,3,0)
        gui.StudsOffset=Vector3.new(0,2,0)
        local text1=Instance.new("TextLabel")
        text1.Text = ("Level:"..game:service('Players').LocalPlayer.leaderstats.Lvl.Value)
        text1.FontSize = "Size14"
        text1.TextColor3 = Color3.new(170, 0, 0)
        text1.TextStrokeColor3 = Color3.new(0, 0, 0)
        text1.TextStrokeTransparency = 0
        text1.Size=UDim2.new(1,0,1,0)
        text1.Position=UDim2.new(0,0,0,0)
        text1.BackgroundTransparency = 1
        text1.Parent=gui else
        game:service('Players').LocalPlayer.Character.Head.BillboardGui.TextLabel.Text= ("Level:"..game:service('Players').LocalPlayer.leaderstats.Lvl.Value)
        end end
end

while true do
onPlayerUpdate()
wait(.1)
end

Also make sure you make the LocalScript...

Thanks! ~marcoantoniosantos3