Why don't this script work?

It's supposed to be"if hum ~= nil then". And instead of "if i then end", you need to write "if i == false then (here should be the rest of your code, without the first else)"

This should work, assuming it doesn't interact with anything else. Comment if there are errors and I'll try to fix them.

game.Players.PlayerAdded:connect(function(player)
    player.Character.CharacterAdded:connect(function(char)
        local i = Instance.new("BoolValue", player)
        i.Name = "KnifeHolding"
        if i == false then --you didn't have an if for the else, and you don't need an else anyways.
            i.Value = true
            local mr = math.random(4) --it'll assume your starting at 1.
            if mr==1 then
                local clone = game.Lighting.Blade:Clone()
                clone.Parent = player.Backpack
            elseif mr==2
                local clone = game.Lighting.Bombos:Clone()
                clone.Parent = player.Backpack
            elseif mr==3
                local clone = game.Lighting.DualKnives:Clone()
                clone.Parent = player.Backpack
            elseif mr==4
                local clone = game.Lighting.InsaneKnife:Clone()
                clone.Parent = player.Backpack
            --else  --put these two lines in if you want to return if "i" is true.
                --return
            end
            local hum = char:FindFirstChild("Humanoid")
            if hum ~= nil then --hum ~= nil as stated by another answerer.
                hum.Died:connect(function(died)
                    i.Value = false
                end)
            end
        end)
    end)
end)