Woow I'm not gonna lie to you at the end I was completely lost and my brain smashed into pieces on this one lol :))
In your opening post, you talked about overlapping only but it looks like your problem it was the Z ordering of the objects if I understood right by looking in the pictures that Ashley posted.
So the problem is if you talk about only overlapping the issue is that when two objects overlap doesn't matter which one is on the top or bottom both counts as overlap:
(A is on Top of B)
A overlaps B
B overlaps A
Both are correct as both overlapping each and doesn't matter who is on top or who is on the bottom at least this how C2 Events works, both conditions will be true if you test both conditions one by one separately.
So that's why I was following your original question and how C2 Events works: and I just concentrate on overlaps in general (Collisions or which objects are touching) ignoring the Z-order.
So if you wanted to make it more clear from the beginning you could just have talked about the Z ordering:
Walls have to be at the top (Oberlaping Player & Dead zone)
The player on the Middle (Overlapping dead Zone)
The dead zone has to be at the bottom
Position Z ordering Matters
Now all made sense as you when you were referring (A overlaps B) in the true you meant (A is on top of the B) so if (B was on top of A) then for you doesn't count as overlap if I'm not mistaking.
So there is it the whole confusion
For you: if you looking (A Overlaps B) so if (B was on top of A) then for you doesn't count as overlap if I'm not mistaking.
For a C2 User: (A Overlaps B) so if B was on top of A then for us it counts as overlap as is touching it.
I'm glad Ashley made the problem clear as I don't think I would have figured out by just looking into "Overlapping" in general by C2 definitions, as it doesn't have the concept of who is on (Top or Bottom)
Anyway, I'm glad you found a solution:)
I will keep it in mind this whole overlap (Different Perspective View) thing just in case I end up on the same situation in the future Jeje