I believe this was broken in revision 1.33 of slime-presentations.el, which replaced `slime-presentation-write'. I think the real bug is that `slime-repl-emit' invokes `insert-before-markers'; I think it should just call `insert' and then manually adjust the markers that should be advanced. The old version of `slime-presentation-write' did something like that.
Matthias
Thanks for the info, that is the conclusion Russ and I stumbled across yesterday after my original fix had the overlays working but still buggy. We then changed the slime-repl-emit function to do precisely as you suggest above: http://common-lisp.net/pipermail/slime-devel/2010-September/017765.html (patch attached there).
Here's the specific commit that is that fix: http://github.com/UnwashedMeme/slime/commit/fd34f0d1924cfec3de6f447907d956dd... As I wrote in the other mail though, there are a few more miscellaneous fixups that make the setup work better.