Using the latest beta, nothing like that is seen here. The overlay track image is the only one displayed - provided that it completely covers the lower track - when play is initiated. No flash.
It's possible that the overlay track there is slightly offset. Expand the sequence to look more closely. If that's not the case, share the project so others can analyze it.
Here's how... http://nch.invisionzone.com/topic/23659-tips-for-getting-help-on-this-forum/
If it contains sensitive material you can link it in a personal message (PM) to me, via the envelope above. Be sure to FILE|SAVE PORTABLE PROJECT AS, not simply SAVE PROJECT, and don't forget to share it.