It seems that the stationary gun uses the bullet of whatevr gun you're holding when you fire it.

Online or where?

Just tested in both online (dedicated) and with the bots (non-dedicated), and I could not reproduce this bug.

If you are playing on SelfKill Beta Server, note that the stats gun had been modded by someone to shoot out m79 grenade

I modded the weapons on the selfkill server.

I looked further with Denacke into this, and we discovered that we couldn't see each other m79 bullet when we are using the modded stats gun in Selfkill server. But we were able to see the bots' m79 bullet when they were using teh modded stat guns...weird stuff?

Yeah I noticed this.