Is it okay to have Sparks inside drill machines?
Typical AC line powered power tools do use universal type motors that use carbon brushes contacting with the copper poles of the rotating commutator on the motor shaft. 



It is not uncommon to see sparks at the interface point between the carbon brush and the commutator as the motor operates. The amount of sparking will often reduce as the brushes wear in during use of the tool. 

Brushes do wear down to the point of needing replacement. When brushes are replaced it is common to once again see increased sparking until the brushes wear to the shape of the commutator.

The presence of sparking should make it clear to avoid use of tools like this in an enclosed space when there is an extremely explosive environment with little ventilation.