For the sprite, you need to set the texture type to either Glow or Additive.
If you set it to "Glow", the image will grow and shrink in size when you move toward and away from it.
If you set it to "Additive", it will do the same... but if you add a value above 1, it will stay a constant size.
Depending how transparent you want that smoke, change the value between 100 - 255.
As for the damage from the cannon... I haven't done any turrets yet, but I can take a crack at it...
First, you're gona need to check if a "shot" is even being fired from the cannon.
Do YOU fire the cannon at a target, or is it firing at you when something is pressed or walked on?
Also, check to see if the destination target of the cannon is correct. If it's an auto fired cannon, there should be a parameter for the "target".
Fiddle around with it. You might need to keep it blank or something... not sure.
You'll also want to check the damage parameter of the cannon. Make sure it has a value like 150 if you want to kill someone with armor, or pretty close to it.