Have an instance variable for team and when players attack eachother make sure their teams are different
Thanks, it took me awhile but I got it thanks to your advice.
In case anyone else stumbles across this and is curious. I pretty much just set up a local variable called FiringPeerSide similar to FiringPeerID from the Multiplayer example. This was my third parameter for the Function TestHit. As tarik suggested I included an instance variable called 'side'. I also had two global variables Team1 = 0, and Team2 = 1. The host would always be on Team2 and every time a peer connected:
Team1 <= Team2 : Peer - set side to 2. add 1 to Team 1
Else : Peer set side to 1. Add 1 to Team 2
Note: these two events are subevents in the Host group under the 'Multiplayer-On Peer Connected' event from the Multiplayer example.
I think that was it and so far it's gotten me passed the initial issues I was having.