How to Ignore Y and X Axis in CFrame?

I think what you are really asking is for is how to set the "look at" position so that it's the same height as the NPC's HumanoidRootPart. That way, we can "look at" a Position, while only taking into account its X and Z coordinates, and we won't topple over our NPC.

Here is your code with the above change, plus some clean-up

script.Parent.Touched:connect(function(Char)
    local Humanoid = Char.Parent:FindFirstChild("Humanoid")
    if Humanoid ~= nil then
        local torso = Char.Parent:FindFirstChild("HumanoidRootPart")
        local rotatingPart = script.Parent.Parent.HumanoidRootPart
        while wait() do
            local lookAt = Vector3.new(
                torso.Position.X,
                rotatingPart.Position.Y,
                torso.Position.Z
            )
            rotatingPart.CFrame = CFrame.new(rotatingPart.Position, lookAt)
        end
    end
end)