Normally you should be getting video with VMR (no overlay) and without VMR (overlay). However in some computers VMR does not work the way it should be. There are graphical problems like diagonal lines and choppy/poor video quality. If you disable VMR in nVidia control panel this time you see blank black screen. This fix 'should' enable overlay layer again. Users reported this also fixes overlay creation problems with WinDVD and Avid programs. Please give feedback if it works.
To fix the problem, you can use Enhancer or apply it manually by finding these lines in INF and changing them accordingly;
HKR,, OverlayMode2, %REG_BINARY%, 50,00,10,00
HKR,, OverlayMode3, %REG_BINARY%, 01,05,40,01
HKR,, OverlayMode4, %REG_BINARY%, 00,00,00,00
After saving, install your driver and restart your computer. I hope this works for you as it did for my Toshiba Satellite 5200-902 with GeForce FX 5600Go.
If you want to try the fix on-the-fly, use the pre-modded INF attached below with Forceware 84.25. If you don't know how to install, you can check Forceware Updater's Quickstart Guide.