Nope, you don't just directly access controller states. You need to get the actor's controller first, then use a certain function on the controller. Also, good lord, there's a better way to check a distance between actors.
Code:
for Billy in MovableMan.Actors do
local flashRange = 111;
local distanceX = self.Pos.X - Billy.Pos.X;
local distanceY = self.Pos.Y - Billy.Pos.Y;
local distance = math.sqrt(distanceX ^ 2 + distanceY ^ 2);
if distance <= flashRange then
local BillyController = Billy:GetController();
BillyController:SetState(Controller.AIM_SHARP, false);
BillyController:SetState(Controller.WEAPON_FIRE, false);
end
end