I am under Window7 and for a while I have no overlay effects under Mumble 1.2.3. It only works under Admin mode.
1) In Mumble go to Configuration > Overlay (Check "Advanced")
2) Go to "Exceptions for the Overlay" > Blacklist > Remove two files that start with "hl" (often at the end of the list)
3) Go to: Settings > Plugins > Reload plugins
4) Reboot your Mumble
Thanks to DAxtER for this tip.
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