If you check DW's other characters for example, they'll usually have specific statedefs for the Projectile's Hitpause.
The Hitspark statetype would usually be present there.

Normally in his characters, using Sagat as an example, you'll see a Statedef under the Projectiles in Helpers.cns called Hit Pause, these lines of code, for example, will be present.

Code:

[State 1011, HitSound]
type = PlaySnd
trigger1 = MoveContact = 1 && NumTarget
trigger1 = !(Target, HitShakeOver)
value = ifElse(MoveGuarded, 130, 2), ifElse(MoveGuarded, 0, 6)
channel = 3
ignorehitPause = 1

[State 1011, Hit Spark]
type = Helper
trigger1 = MoveContact = 1 && NumTarget
trigger1 = !(Target, HitShakeOver)
helperType = Normal
stateNo = ifElse(MoveGuarded, 8001, 8013)
ID = 8000
name = "Spark"
posType = P1
pos = ifElse(P2Dist x < 0, 0, ifElse(P2Dist x < 20, ceil(P2Dist x), 20)), 0
ownPal = 1
facing = -1
size.xScale = 1
size.yScale = 1
pauseMoveTime = 65535
superMoveTime = 65535
ignoreHitPause = 1

Obviously you'll have to change the pos though and maybe sound too.

I feel like those sparks should be a bit higher seeing the projectile's look.

yooo... the Midnight Bliss is actually cool... (why is my nose bleeding?)