Something is horribly wrong with my overlays, and I don't know what.

Can you post your compile log just in case

Also check your Tools & View pull down menu and your menu at the top of the editor to make sure nothing unusual is checked or clicked.

You could also try removing it and re-applying. Does it jump around or is it stationary ?

It almost looks to me like two brushes overlaping each other but both have different textures. Make sure there isn't, that could cause a problem. Did your draw a black texture box to fill in behind the windows because it kinda looks that way. Just go into hammer and select the brush drag it away and see if anything is left behind. I have accidently copied stuff over each other before.

I don't think those are meant for overlays.

The texture with those windos includes the background brick wall. Try to remove the overlays, and use the texture on the wall you applied them to instead.

It kind of looks like the stretched texture is one of the stain overlays, all whacked out, to me.

What texture are you using there for the overlay in the second picture?