You guys are making this way too complicated
Fix: http://dl.dropbox.com/u/17634050/Zelda%20II_fix.cap
(Also fixes a bug where you can't attack in-air while holding down)
Kinda had to re-do all of your events lol.
Also, if I may.. Link is supposed to have 3 walking frames, less friction, and pulls his sword back before and after attacking. You're also using the wrong frames for jumping. Aaaand you might want to make a 'base' or 'collision mask' for Link or he will get hung on ledges and stuff. Ok I'm leaving now..