Current settings should work. I’m not seeing anything here that would stop a collision component from triggering a hit event.
Preferred Projectile Sphere collision component settings…
Can character step up on (No)
Collision Enabled (Query Only), unless your enabling physics in PMC.
Technically you should create a custom collision obj type in project settings for your projectile collision. If you want to actually be able to hit the character mesh, then you need a custom collision type for the capsule, that will ignore the projectile.