Let me spell it out again. The only way the game could have thought you activated it was because you pressed the button. You pressed it and got hit? That's called canceling. It just happened soon enough after for the animation and music not to go off.
Man, all these comments about Sly's spamming makes me think I'm playing him wrong. I'm in the Top 100 rankings with a level 90 Brownbelt, but I rarely, if ever, use the Electric Racoon Ball or Counter attacks. I find they leave me too vulnerable. I definitely use my Invisibility 100% of the match, though. I can't block so I'm not going to leave myself an open target for combos.
On the note about his Level 1 super being uninterruptable, I agree that's the case. Since it can be used in stealth, few times is anyone near enough to attack me in time. But it's definitely being dodged. But, since everyone is saying his AP generation sucks, maybe he needs such a powerful super to balance him out?