The reason he's being destroyed is because he's constantly overlapping the DAMAGE sprite, so all those events will keep executing until finally, the player runs out of HP and is destroyed. Add a new condition to the overlap event - SYSTEM -> TRIGGER ONCE WHILE TRUE
5. IF PLAYER OVERLAPS DAMAGE
+TRIGGER ONCE WHILE TRUE
- takingdamage = 0 then takingdamage = 1
I think I've read your question right. Soz if not, I haven't been to bed in over 40 hours ;p