Run your game in Construct 2, in debug mode - then you can see whether your objects gets destroyed or not.
The physics engine is changed at the same place where you write your project name; just click outside your scene at an empty place; then click "View" for project properties.
I always use the Box2D physics engine, it works fine, even with many sprites (~500) that collides with eachother continously.
Can you show us something of the game you're making, to help us help you...?