Sounds interesting!
I tried again with the script attached to an NPC, and both worked fine... I'm sure that you are, but just in case, are you aware that the player's health can't exceed the amount laid out in the player start marker (e.g. 100)? I forgot and thought it didn't work, but when I reduced my health in a hurt zone first, and then went back to the NPC, it increased my health by one - just like in the script.
I made a tiny tweak to the script as well, just changed the state from 200 to 1, which activates every time you go near the NPC, not just once (Although you may not want that?)
;Artificial Intelligence Script
;Header
desc=test health
;Triggers
:state=0:state=1
:state=1,plrdistwithin=50:plraddhealth=1,plrsound=audiobank\misc\checkpoint.wav,state=200
;End of Script
Hope I helped, Let me know
-Duke.
So we beat on, boats against the current, borne back ceaselessly into the past.