Why does this script result in an error when the SpawnLocation is touched by a player?

I see you have found the solution, and yes there is a better way of doing this!

Saying this:

if hit.Parent.Name ~= "Workspace" then

is very inefficient, this is because the parent will not always be Workspace. For example, a part in a group, its parent would be the group and not the Workspace.

Essentially what we can do is check for a humanoid in the player, basically checking if the part that has touched it is a part of a player and not a random part.

So in conclusion make a variable using :FindFirstChild() to find the Humanoid, and then you can if the variable. If humanoid was not found, the if statement will error and not continue further, and that's kinda what we want.

Finalized Code:

local debounce = false

script.Parent.Touched:connect(function(hit)
    if not debounce then
        debounce = true
    local checkifplayer = hit.Parent:FindFirstChild("Humanoid")
    if checkifplayer then
            local player = game:GetService("Players"):GetPlayerFromCharacter(hit.Parent)
            if player then
                if player.RespawnLocation ~= script.Parent then
                        player.RespawnLocation = script.Parent
                end
            end
        wait(1)
        debounce = false
    end
    end
end)

Also you might see I put the check before we start doing stuff with the player, that is to cut some slack for the script. If there was no player, the script would not function correctly.

Hope this helped!