How to make particles spawn on an entity when it attacks

There's two types of particle functions, both in the 'world management' tab. The first one lets you spawn a number of particles in a radius with a given speed, and the second lets you spawn individual particles with a specific location, speed, etc. The first one works for most things if you just want a random burst of particles, but the second is good if you want to program in a more complicated particle generation procedure. In your case, you would want to use the 'before entity is hurt' procedure trigger, and, if the source entity, (not the event/target entity), is your custom entity, use the 'spawn particles' function at the x/y/z position of the source entity.