Hi johnkx,
Looking at the .capx file I can see that the following line is your problem:
"Distance
Every tick -> Add Block.Bullet.Speed * dt to CurrentDistance"
When you are "pausing" the game by using "Set Bullet Disabled" for 5 seconds you are not stopping this counter from running. In fact, Block.Bullet.Speed is still constant as you are not changing that value, you are merely 'Disabling' the object's behaviour. This means that even though your blocks are disabled they are continuing to spawn.
I resolved it by adding a global variable called "Pause" and used Boolean logic:
"On "BGStop" -> Set Pause to 1"
"On "BGStart" -> Set Pause to 0"
"Distance
Every tick
Pause = 0 -> Add Block.Bullet.Speed * dt to CurrentDistance"
By adding the condition "Pause = 0" your Distance logic will only run while the game isn't paused.