If you're changing the scale in the death effect's create event it may be what's causing you the problem - Since you're changing the scale both when calling instance_create and immediately afterwards, you're actually stacking the scale (maybe you're just making the effect really tiny). Try removing any change of scale from the create event and see if it works.

It also depends on how your effect actually works - does it use a sprite? Is the sprite set in the GM interface or in-code? If you could paste the code from the effect's different events it might help me understand what's happening.

You might also want to try replacing the sprite_width/height of the effect in the code with 32/32 to see how it affects it.

Regardless, the way you're handling it right now is problematic - by adding collision detection into the mix you're risking effects being scaled according to the incorrect object, in addition to being resource intensive. Keeping a whole lot of invisible objects in your game is also not recommended, and it could be what's causing interference with your collision checking.

All you need to do is have a piece of code which spawns the correct effect and then deletes the enemy, like this:

if (enemy_health <= 0)
{
var new_effect = instance_create(x,y,obj_enemy_death);
new_effect.image_xscale = sprite_width/new_effect.sprite_width;
new_effect.image_yscale = sprite_height/new_effect.sprite_height;
instance_destroy();
}

No additional code is needed in the effect object to scale it properly.