Stop, please.
You need to define {_loc}
inside the object 'every 0.7 seconds'
In addition, it is errors because you spelled 'element' as 'elmement' -_-
Create the instance
on skript load:
set {list::*} to red wool, blue wool, lime wool, purple wool, light blue wool, cyan wool, orange wool, yellow wool, and green wool
Change every 0.7 seconds to
every 0.7 seconds:
set {_loc} to location(-174, 4, -93, world "world")
set block at {_loc} to a random element out of {list::*}
The spacing will look weird, just make sure both lines line up to one another.
Due to your code, it seems you don't know how OOP languages even function. All things must be inside an object. Skript is far from an OOP, it's just English, but it does draw from them. Everything and anything you define must be under a statement in Skript. Learn Skript, please.
Check out my forum post to get tips: