So I have the guard dog - and he has health and sanity points. His ability is that he retaliates causing 1 damage when attacked. How and when would an enemy attack him? I can't find this in the rules at all.
Under Dealing Damage/Horror in the Rules Reference:
"When an investigator is dealt damage or horror, that investigator may assign it to eligible asset cards he or she controls. To be eligible, an asset card must have health in order to be assigned damage, and it must have sanity in order to be assigned horror."
In plain English, this means that when your investigator is about to take a hit, you can assign damage to your allies in play instead. You can even split up the damage/horror as you see fit. So say you have an enemy that deals 2 damage and 2 horror. When it attacks, you can give the 2 damage to the guard dog and take the 2 horror yourself. This would trigger the guard dog's ability, plus the dog would survive the attack.