Health not counting down?

You have a few problems here. I'm supplying some cleaned up code with some (potential) fixes here.

Your key issues were:

• Misuse of yield within a noncoroutine.

• Not using else if or else logical blocks

Coroutines are tricky but powerful tools. They require explicitly being started through the MonoBehaviour.StartCoroutine method. See for details on this. http://docs.unity3d.com/ScriptReference/MonoBehaviour.StartCoroutine.html

They next issue was that because many of the logical blocks could activate together there was a lot of unexpected behavior. This was especially bad in the OnGui method.

I'd suggest becoming familiar with using the debugger, and stepping through your code if you have problems like this. As has been pointed out by others, there were conditionals which were probably not evaluating as intended in several places and without the 'else if' and 'else' usage your code was executing a lot of unnecessary and potentially disruptive code. (Rule of thumb, if one thing should happen and not the others, then 'else' and 'else if' are your friends)

 # pragma strict
 
 var tex1 : Texture;
 var tex2 : Texture;
 var tex3 : Texture;
 var tex4 : Texture;
 var tex5 : Texture;
 
 var health : float = 100.0;
 
 private var dead : bool = false;
 private var maxHealth : float = 100.0;
 private var enterCollider : boolean = false;
 
 var damagePerSecondOnContact : float = 20;
 var healthRegeneratedPerSecond : float = 5;
 
 
 //Damage Collider
 function OnTriggerEnter(Col : Collider) {
     if (Col.gameObject.tag == "Enemy") {
         enterCollider = true;
         Debug.Log("Is inside collider");
     }
 }
 
 function OnTriggerExit(Col : Collider) {
     if (Col.gameObject.tag == "Enemy") {
         enterCollider = false;
     }
 }
 
 function Update() {
 
     if(dead){
         health = 0;
         return;
     }
     
     //check for health exceeding maxHealth and correct if needed
     if (health > maxHealth) {
         health = maxHealth;
     }
     
     if (health > 0) {
         //We are alive! Check if we should heal or take damage
         if(enterCollider == true){
             //take damage
             health -= Time.deltaTime * damagePerSecondOnContact;
             Debug.Log("Was damaged to " + health);
         }
         else{
             //heal (a heal delay might be good, we may be regenerating faster than collisions can cause damage)
             health += Time.deltaTime * healthRegeneratedPerSecond;
             Debug.Log("Was healed to " + health);
         }
     }
     else if (health <= 0) {
         StartCoroutine(OnHealthZero()); //THIS WAS WHAT WAS MISSING
     }
 }
 
 function OnGUI() {
     if (health <= 0 || dead) {
         GUI.DrawTexture(Rect(0, 0, Screen.width, Screen.height), tex5);
     }
     else if (health <= 70) {
         GUI.DrawTexture(Rect(0, 0, Screen.width, Screen.height), tex1);
     }
     else if (health <= 45) {
         GUI.DrawTexture(Rect(0, 0, Screen.width, Screen.height), tex2);
     }
     else if (health <= 25) {
         GUI.DrawTexture(Rect(0, 0, Screen.width, Screen.height), tex3);
     }
     else if (health <= 10) {
         GUI.DrawTexture(Rect(0, 0, Screen.width, Screen.height), tex4);
     }
 }
 
 /** 
  *  Coroutine function which runs the death sequence.
  *  @see http://docs.unity3d.com/ScriptReference/MonoBehaviour.StartCoroutine.html
  */
 function OnHealthZero(){
     //we indicate that the player died IMMEDIATELY so as to stop bad updates
     Debug.Log("Is dead now");
     dead = true;
     yield(WaitForSeconds(1));
     Application.LoadLevel("Deade");
 }