It works in a couple of non-Steam games we tried, so you might want to report this to the Warsow developers too. It could still be a Steam-specific overlay issue, though.
Can reproduce, apparently its Warsow behaviour as I’m told this is the same on Windows. Hopefully their greenlit version fares better.
Happens to me in Warsow on Windows, and if I recall correctly, on Ubuntu (GNOME 2). Warsow supports mouse badly, vertical movement is laggy, especially in the menus, and horizontal is sometimes laggy too.
Nothing extracted yet.
Or maybe it's just the Warsow. I've tested hl2mp and this game, everything's fine in hl2mp. In Warsow only keyboard was working in Overlay.