It’s difficult to tell from your description. You should find that the overlay on the stream updates if the source image file changes. Is this not what you are seeing? You may want to open a support ticket if you still find it’s not working. Include a copy of your /conf and /logs and /transcoder as well as your source image.
I have created a folder in the content/ folder and dropped a test.png file. Then started the stream and verify that there is overlay. Then pasted an edited version of the test.png, once the copy process completed the image updated in the stream. I then repeated the process to get back to the original test.png.
I am using the latest version of Wowza Streaming Engine 4.6.0.01
You may want to contact our support department, we would want the following files from your Wowza system zipped and shared: /conf and /logs and /transcoder as well as your source image.
I also detected the above-described problem. The overlay image is not a changed if I changed overlay source image path (enabled option “Update overlay image when source image updates”). Has anyone confirmed this bug? Any solution? Overlay image changes if I disable and then enable transcoder. I use 4.5.0.03 (build 19252) Wowza.