Can overlay overwrite files?

I get

error: Hardlinking e0/c4319a0ee06ca21ce10db034c72a97487f49e24f4c327ff5881667dc6cab07.file to config: File exists

Could you give us more details here?

Are you doing something custom with coreos-assembler or rpm-ostree?

We intentionally make this an error today; rpm-ostree does expose a separate key to fully override, see: https://github.com/coreos/rpm-ostree/pull/1830