There are two things you are doing wrong there:
Firstly; you only need to set the the sprites scissor once. You don't need to put it in the main loop.
Secondly; you have misunderstood the parameters for your scissor. Y1 is 700 and Y2 is 200. That tries to create a box with a height of minus 500 which, of course, makes no sense!
Take a look at the code below, it demonstrates two sprites being scissored by two different scissor boxes:
// Project: spritescissortest
// Created: 2020-09-03
// show all errors
SetErrorMode(2)
// set window properties
SetWindowTitle( "spritescissortest" )
SetWindowSize( 800, 800, 0 )
SetWindowAllowResize( 1 ) // allow the user to resize the window
// set display properties
SetVirtualResolution( 800, 800 ) // doesn't have to match the window
SetOrientationAllowed( 1, 1, 1, 1 ) // allow both portrait and landscape on mobile devices
SetSyncRate( 60, 0 ) // 30fps instead of 60 to save battery
SetScissor( 0,0,0,0 ) // use the maximum available screen space, no black borders
UseNewDefaultFonts( 1 ) // since version 2.0.22 we can use nicer default fonts
spr as integer[1]
x# = 400
y# = 400
for k = 0 to 1
spr[k] = CreateSprite(0)
SetSpriteSize(spr[k], 100, 100)
next k
SetSpriteColor(spr[0], 255, 0, 0, 255)
SetSpriteColor(spr[1], 0, 255, 0, 255)
SetSpriteScissor(spr[0], 100, 100, 700, 500)
SetSpriteScissor(spr[1], 100, 100, 500, 700)
red = MakeColor(255, 0, 0)
green = MakeColor(0, 255, 0)
c = 0
do
print("Hold B to draw scissor bounds")
SetSpritePositionByOffset(spr[0], x#+sin(c)*200, y#+cos(c)*200)
SetSpritePositionByOffset(spr[1], x#+cos(c)*200, y#+sin(c)*200)
inc c
if GetRawKeyState(66)
DrawBox(100, 100, 700, 500, red, red, red, red, 0)
DrawBox(100, 100, 500, 700, green, green, green, green, 0)
endif
sync()
loop