Just had the exact same problem with meta quest 3 and UE 5.2 … and found a solution, which I posted here:
In short: The “Underlay” functionality started to work as expected after I changed the Mobile Antialiasing Method from “None” to “Multisample Anti-Aliasing (MSAA)”.
In case this still doesn’t help, I recommend comparing and matching your rendering settings against the ones from epic’s VR template.