Consider what happens before the splice, when $i is 1:

• Before the splice:

  9,0,0,5,3,0,0,0,2,0,1,0
    ^ $i is 1
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• After the splice:

  9,0,5,3,0,0,0,2,0,1,0
    ^ $i is 1
  [download]

  $arry[$i] is still 0

You need to keep spliceing while it remains zero, change your if to a while.

Now think about what happens when you've just spliced that last 0. $i points past the end of the array, so you need to add a check for that into the while condition:

while ( $i <= $#arry &&  $arry[$i] == 0 )
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Having said all of that, GrandFather is right. Just use grep.