You need to add the opacity to make it visible. Also make sure you’re in the correct zone. You can add it with background name (no opacity needed) or use create command with opacity. Make sure to add “in 0” so it appears right away. Also make sure the overlay name is spelled right.
Guide on overlays:
Also when placing overlays and characters into a scene, use layers: HOW TO: Move Characters / Overlays to the Layers
#Example:
&overlay BLOOD PUDDLE create
&overlay BLOOD PUDDLE shifts to 140 240 in zone 1 in 0
&overlay BLOOD PUDDLE scales to 0.7 0.7 in zone 1 in 0
&overlay BLOOD PUDDLE to layer 1
&overlay BLOOD PUDDLE opacity 1 in 0