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I am trying to create this effect
http://qldsignfactory.com.au/sites/qldsignfactory.com.au/files/photos/bunting.jpg
I've tried using this method here but I can't get the triangle to point perpendicular the path...
Any idea how I can create the effect?
Blends won't work for what you are after. The reason is you're looking to get artwork to align to basically one side of a path. Blends align to the center of paths in all cases. And, as you've discovered, blends don't rotate artwork based on their spine. Blends only rotate artwork if the artwork creating the blend is rotated.
First: Use this basic technique for a pattern brush:
How to make Objects follow a path (illustrator) (like on the las vegas sign)
Here's a screen shot of how the brush art would look, then how it looks applied to a curved stroke:
