I am also having this issue. It originally started a couple of months back when I built the pc and put a Geforce 8500GT in it. I never did figure it out and just swapped it out for a Radeon HD2600XT and all was good. Now I went and did it again, I found a deal on a 8800GT that was so good I couldnt resist. I just got done installing it, reformatting the pc, and installing the drivers again and still have the same overlay issue. Did anyone ever find out what was causing this? I have a vista machine as well and the same 8800GT card installed in it and no issues in vista, just XPMCE
C2D E6600, 2 GB DDR2 PC6400 RAM, EVGA 680i MB, Nvidia 8800GT w/HDCP, 2 Seagate 320GB SATA HD, 2 Hauppauge HVR 1600, LG HD-DVD/Blu-Ray Drive,Vista Home Premium, Mitsubishi H3000U Projector, 42" Phillips Plasma with Xbox 360 as extender