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The host window cutout works by checking on every render if a windows visibility state has changed, if it has it creates a new window region that excludes the areas of visible overlays. For some reason, it doesn't appear that your overlay is triggering a change. When the mute or volume overlay appears, its visibility is changed and so will trigger a new window region creation which should include your overlay if it is visible at the time.
Can you send me your code? I am unable to duplicate this problem.
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