I tried this in my own level. The fire function will not run unless I call it somehow, as (for example) a wait loop in the main function. Strangely, the decal does not seem to appear on level blocks, either, though the decals show up fine against models. The blood particles always show.
I don't want to belabor the point, but I wonder if you could kindly supply the dolltest.wmp file. That way, I can experiment with your original level and perhaps figure out what is going on, without bothering you further.
Thanks again for an excellent piece of work.