Hello again!
It seems your setup is fine, but you might have a slight error in your notetag. According to the notetag you have shown, you have 10 arguments instead of 11. It's not a problem cause omitting the last argument 'hidden' is the same as setting it to False so the overlay will be visible by default. But that also means that the last argument of your notetag which you set to 'True' is actually the Battle argument. As stated in the instructions, Animated overlays can only be shown on the Map OR in battle. So if you set the battle argument to 1 (or true), the overlay will appear only in battle (so if you have ran a test on map, it's normal you couldnt see it)...
Also, a frame rate of 1 will give a glitching animation cause the images will update each game frame (that is 60 times a second). I recommand using a frame rate around 12 like most of the default sprite animation. (but maybe that's what you wanted, so I'm just saying)...
Hope that help a bit. Let me know if the problem persist.
Regards.