OK I have it working now.
It doesn’t like Fraps. It doesn’t like the ATI Tray Tool fps counter. It doesn’t like anything. I’ve got a feeling that it required my webcam’s system-tray utility to be shutdown.
Shut that stuff down
Run TS
Login to a TS server
Start overlay
Ensure the Overlay name is the same as the one you used on the server in TS
Load game
The overlay itself is a semi-transparent couple of lines telling you what channel you’re in and listing anyone who’s talking. I like it a lot. Unobtrusive and totally cool.
I have read that PunkBuster doesn’t like it so be careful out there…