There are no stars in your input! And your script should work fine if there were.
With a little code cleanup it becomes:

my $output; 
       while( my $line = <DATA> ) {
           # get rid of line terminator:
           chomp $line;
           next unless $line;
           # Get rid of line numbers:
           $line =~ s/^N[0-9]{2}\ //;
           # Replace * and the beginning of the line with !:
           $line =~ s/^\*/!/ and print $line and next;
           # Keep any numbers prefixed with X,Y or Z.:
           $line =~ s/(X|Y|Z)([0-9.-]+)/ $2/g;
           # Throw the rest away:
           $line =~ s/[A-Z][0-9.+-]+//g;
           print $line;
       }
...
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