Thank you Nord that solved it.
I got tripped up because HandObs image sets are handled differently.
So basically although the Projectiles sprite sets in extraSprites: are indexed in multiples of 35 the items: bulletSprite: value must be the Projectiles sprite set index divided by 35.
Example: If you want to use the sprite set "875: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png" the value that bulletSprite: in the items: section should be set to is bulletSprite: 25 not 875.
extraSprites:
- type: Projectiles
height: 3
width: 65
subX: 3
subY: 3
files:
385: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
420: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
455: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
490: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
525: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
595: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
630: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
665: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
700: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
735: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
770: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
805: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
840: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
875: Resources/Bullet_Sprite_Example/Bullets/BlueHeavyLaser_bullet.png
items:
- type: STR_EXAMPLE_WEAPON
size: 0.2
costSell: 36900
weight: 8
bigSprite: 1
floorSprite: 1
handSprite: 0
bulletSprite: 25
fireSound: 1
hitSound: 1
hitAnimation: 1
power: 60
damageType: 4
accuracyAuto: 46
accuracySnap: 65
accuracyAimed: 100
tuAuto: 34
tuSnap: 25
tuAimed: 50
clipSize: -1
battleType: 1
twoHanded: true
invWidth: 1
invHeight: 3
attraction: 9
listOrder: 3725