Bug#221354: Bug still exists.
I can still reproduce the bug with 1.4.4-4
I've determined two contributing factors:
1. the use of ^M line endinds in overlay-fix
2. The use of the -nomule variant of xemacs.
If both occur, then so does the bug. If I remove the '^M' line ending
from the file or switch to xemacs21-mule, the bug disappears.
This reduced testcase fails in xemacs21-nomule:
I was running xemacs 21.4.6-8, the nomule variant.
If I swap to using xemacs 21.4.6-8 mule, then the bug disappears.
I have a workaround, which is the important part. I apologize for not
replying earlier, but I don't recall ever seeing a feedback.