Thanks for playing! First off, if a character dies, they won't be able to battle if their HP is 0, but this doesn't affect their walking sprites. I suppose it is possible to change their walking sprites to reflect when they are knocked out, but I'm not fully sure.
Second, this engine doesn't really support an enemy health bar. There may be Scan spells/items to correct this, but it would cost a turn, and I didn't include one in this game. I might consider working one in if I make a future update, thanks for the feedback!