whats wrong here

Solution is to swap your nested For/Each's around in your collision code:

Function kills() ;NEEDS WORK... BAD REAL BAD
  For b.bullet=Each bullet
    For e.enemy=Each enemy
      If RectsOverlap(e\x,e\y,10,10,b\x,b\y,10,10)
        Delete e
      End If
    Next
  Next
End Function

Alternatively, just exit the For/Each loop after deleting the enemy:

Function kills() ;NEEDS WORK... BAD REAL BAD
  For e.enemy=Each enemy
    For b.bullet=Each bullet
      If RectsOverlap(e\x,e\y,10,10,b\x,b\y,10,10)
        Delete e
        Exit
      End If
    Next
  Next
End Function

Basically what you were doing wrong - when the first bullet collides with the enemy, you delete the enemy type itself. Your original code then proceeded to check the rest of the bullets for collisions against the now non-existent enemy.

This is why it only caused an error if there was more than one bullet active at the time of collision.