How did I mess up roblox hit boxes? (And how can I fix it?)

What my error looks like: http://imgur.com/a/cF5cw

Important notes:
The bullet destroys itself when it detects the collision
The gray area is the actual part
The character is controlled through CFrame and is anchored.
The projectile uses velocity to move

As you can see, collisions aren't being detected at all, or are being detected before the client ever sees the parts collide. I have tried using custom collision as well as the simple part.Touched:connect(function() end) event, but both either go off too early or not at all. What did I mess up?

-The Code

function fire(direction)
	local projectile = Instance.new("Part", workspace)
	projectile.Name = "Projectile"
	projectile.CFrame = CFrame.new(char.Head.Position, char.Head.Position + direction) 
	local spawnPos = projectile.Position
	projectile.Velocity = Vector3.new(direction.X * projectileSPD, 0, direction.Z * projectileSPD)
	projectile.CanCollide = false
	projectile.Size = Vector3.new(.7, 0.2, 3.06)--(.1,.1,.1)--(.7, 0.2, 3.06)
	projectile.Transparency = 0
	
	local surfacegui = Instance.new("SurfaceGui")
	surfacegui.Face = "Top"
	surfacegui.Parent = projectile
	
	local image = Instance.new("ImageLabel")
	image.BackgroundTransparency = 1
	image.Image = projectileImage
	image.Position = UDim2.new(0,-100,0,-100)  
	image.Size = UDim2.new(0,1000,0,800)	
	image.Parent = surfacegui	

	local potentialHits = {}
	spawn(function()
		while projectile and wait(0.1) do
			if (projectile.Position - spawnPos).magnitude >= range then	
				projectile:Destroy()
			end
			projectile.Velocity = Vector3.new(direction.X * projectileSPD, 0, direction.Z * projectileSPD)	
		end
	end)

	projectile.Touched:connect(function(otherPart)
		if otherPart.Parent:FindFirstChild("PlayerID") and otherPart.Parent:FindFirstChild("Health") then
			local damage2 = math.max(damage*0.15, damage - (otherPart.Parent.Stats.Defence.Value.X + otherPart.Parent.Stats.Defence.Value.Y)) 
			otherPart.Parent:FindFirstChild("Health").Value = otherPart.Parent:FindFirstChild("Health").Value - damage2
			projectile:Destroy()
		end
		if otherPart.Parent ~= script.Parent and otherPart.Name == "Wall" then
			projectile:Destroy()
		end
	end)
	wait(math.random(cooldown - cooldownrange, cooldown + cooldownrange))
end

-Edit 2 http://imgur.com/a/83oW0 - Most recent code It is now hitting except the hitboxes are still messed up