diff --git a/dlls/ddraw/tests/Makefile.in b/dlls/ddraw/tests/Makefile.in
index 60eeef80d25..a3d0ce5cf12 100644
--- a/dlls/ddraw/tests/Makefile.in
+++ b/dlls/ddraw/tests/Makefile.in
@@ -9,6 +9,5 @@ C_SRCS = \
 	ddraw7.c \
 	ddrawmodes.c \
 	dsurface.c \
-	overlay.c \
 	refcount.c \
 	visual.c
diff --git a/dlls/ddraw/tests/ddraw1.c b/dlls/ddraw/tests/ddraw1.c
index 67410935f79..4090b264a52 100644
--- a/dlls/ddraw/tests/ddraw1.c
+++ b/dlls/ddraw/tests/ddraw1.c
@@ -8410,6 +8410,99 @@ done:
     DestroyWindow(window);
 }
 
+static void test_overlay_rect(void)
+{
+    IDirectDrawSurface *overlay, *primary;
+    DDSURFACEDESC surface_desc;
+    RECT rect = {0, 0, 64, 64};
+    IDirectDraw *ddraw;
+    LONG pos_x, pos_y;
+    HRESULT hr, hr2;
+    HWND window;
+    HDC dc;
+
+    window = CreateWindowA("static", "ddraw_test", WS_OVERLAPPEDWINDOW,
+            0, 0, 640, 480, 0, 0, 0, 0);
+    ddraw = create_ddraw();
+    ok(!!ddraw, "Failed to create a ddraw object.\n");
+    hr = IDirectDraw_SetCooperativeLevel(ddraw, window, DDSCL_NORMAL);
+    ok(SUCCEEDED(hr), "Failed to set cooperative level, hr %#x.\n", hr);
+
+    if (!(overlay = create_overlay(ddraw, 64, 64, MAKEFOURCC('U','Y','V','Y'))))
+    {
+        skip("Failed to create a UYVY overlay, skipping test.\n");
+        goto done;
+    }
+
+    memset(&surface_desc, 0, sizeof(surface_desc));
+    surface_desc.dwSize = sizeof(surface_desc);
+    surface_desc.dwFlags = DDSD_CAPS;
+    surface_desc.ddsCaps.dwCaps = DDSCAPS_PRIMARYSURFACE;
+    hr = IDirectDraw_CreateSurface(ddraw, &surface_desc, &primary, NULL);
+    ok(SUCCEEDED(hr), "Failed to create surface, hr %#x.\n",hr);
+
+    /* On Windows 7, and probably Vista, UpdateOverlay() will return
+     * DDERR_OUTOFCAPS if the dwm is active. Calling GetDC() on the primary
+     * surface prevents this by disabling the dwm. */
+    hr = IDirectDrawSurface_GetDC(primary, &dc);
+    ok(SUCCEEDED(hr), "Failed to get DC, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_ReleaseDC(primary, dc);
+    ok(SUCCEEDED(hr), "Failed to release DC, hr %#x.\n", hr);
+
+    /* The dx sdk sort of implies that rect must be set when DDOVER_SHOW is
+     * used. This is not true in Windows Vista and earlier, but changed in
+     * Windows 7. */
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_SHOW, NULL);
+    ok(hr == DD_OK || hr == DDERR_INVALIDPARAMS, "Got unexpected hr %#x.\n", hr);
+
+    /* Show that the overlay position is the (top, left) coordinate of the
+     * destination rectangle. */
+    OffsetRect(&rect, 32, 16);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    ok(pos_x == rect.left, "Got unexpected pos_x %d, expected %d.\n", pos_x, rect.left);
+    ok(pos_y == rect.top, "Got unexpected pos_y %d, expected %d.\n", pos_y, rect.top);
+
+    /* Passing a NULL dest rect sets the position to 0/0. Visually it can be
+     * seen that the overlay overlays the whole primary(==screen). */
+    hr2 = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, 0, NULL);
+    ok(hr2 == DD_OK || hr2 == DDERR_INVALIDPARAMS || hr2 == DDERR_OUTOFCAPS, "Got unexpected hr %#x.\n", hr2);
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    if (SUCCEEDED(hr2))
+    {
+        ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+        ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+    }
+    else
+    {
+        ok(pos_x == 32, "Got unexpected pos_x %d.\n", pos_x);
+        ok(pos_y == 16, "Got unexpected pos_y %d.\n", pos_y);
+    }
+
+    /* The position cannot be retrieved when the overlay is not shown. */
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(hr == DDERR_OVERLAYNOTVISIBLE, "Got unexpected hr %#x.\n", hr);
+    ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+    ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+
+    IDirectDrawSurface_Release(primary);
+    IDirectDrawSurface_Release(overlay);
+done:
+    IDirectDraw_Release(ddraw);
+    DestroyWindow(window);
+}
+
 START_TEST(ddraw1)
 {
     IDirectDraw *ddraw;
@@ -8485,4 +8578,5 @@ START_TEST(ddraw1)
     test_lockrect_invalid();
     test_yv12_overlay();
     test_offscreen_overlay();
+    test_overlay_rect();
 }
diff --git a/dlls/ddraw/tests/ddraw2.c b/dlls/ddraw/tests/ddraw2.c
index fb9f816641a..5c0bb5208f5 100644
--- a/dlls/ddraw/tests/ddraw2.c
+++ b/dlls/ddraw/tests/ddraw2.c
@@ -9517,6 +9517,99 @@ done:
     DestroyWindow(window);
 }
 
+static void test_overlay_rect(void)
+{
+    IDirectDrawSurface *overlay, *primary;
+    DDSURFACEDESC surface_desc;
+    RECT rect = {0, 0, 64, 64};
+    IDirectDraw2 *ddraw;
+    LONG pos_x, pos_y;
+    HRESULT hr, hr2;
+    HWND window;
+    HDC dc;
+
+    window = CreateWindowA("static", "ddraw_test", WS_OVERLAPPEDWINDOW,
+            0, 0, 640, 480, 0, 0, 0, 0);
+    ddraw = create_ddraw();
+    ok(!!ddraw, "Failed to create a ddraw object.\n");
+    hr = IDirectDraw2_SetCooperativeLevel(ddraw, window, DDSCL_NORMAL);
+    ok(SUCCEEDED(hr), "Failed to set cooperative level, hr %#x.\n", hr);
+
+    if (!(overlay = create_overlay(ddraw, 64, 64, MAKEFOURCC('U','Y','V','Y'))))
+    {
+        skip("Failed to create a UYVY overlay, skipping test.\n");
+        goto done;
+    }
+
+    memset(&surface_desc, 0, sizeof(surface_desc));
+    surface_desc.dwSize = sizeof(surface_desc);
+    surface_desc.dwFlags = DDSD_CAPS;
+    surface_desc.ddsCaps.dwCaps = DDSCAPS_PRIMARYSURFACE;
+    hr = IDirectDraw2_CreateSurface(ddraw, &surface_desc, &primary, NULL);
+    ok(SUCCEEDED(hr), "Failed to create surface, hr %#x.\n",hr);
+
+    /* On Windows 7, and probably Vista, UpdateOverlay() will return
+     * DDERR_OUTOFCAPS if the dwm is active. Calling GetDC() on the primary
+     * surface prevents this by disabling the dwm. */
+    hr = IDirectDrawSurface_GetDC(primary, &dc);
+    ok(SUCCEEDED(hr), "Failed to get DC, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_ReleaseDC(primary, dc);
+    ok(SUCCEEDED(hr), "Failed to release DC, hr %#x.\n", hr);
+
+    /* The dx sdk sort of implies that rect must be set when DDOVER_SHOW is
+     * used. This is not true in Windows Vista and earlier, but changed in
+     * Windows 7. */
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_SHOW, NULL);
+    ok(hr == DD_OK || hr == DDERR_INVALIDPARAMS, "Got unexpected hr %#x.\n", hr);
+
+    /* Show that the overlay position is the (top, left) coordinate of the
+     * destination rectangle. */
+    OffsetRect(&rect, 32, 16);
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    ok(pos_x == rect.left, "Got unexpected pos_x %d, expected %d.\n", pos_x, rect.left);
+    ok(pos_y == rect.top, "Got unexpected pos_y %d, expected %d.\n", pos_y, rect.top);
+
+    /* Passing a NULL dest rect sets the position to 0/0. Visually it can be
+     * seen that the overlay overlays the whole primary(==screen). */
+    hr2 = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, NULL, 0, NULL);
+    ok(hr2 == DD_OK || hr2 == DDERR_INVALIDPARAMS || hr2 == DDERR_OUTOFCAPS, "Got unexpected hr %#x.\n", hr2);
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    if (SUCCEEDED(hr2))
+    {
+        ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+        ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+    }
+    else
+    {
+        ok(pos_x == 32, "Got unexpected pos_x %d.\n", pos_x);
+        ok(pos_y == 16, "Got unexpected pos_y %d.\n", pos_y);
+    }
+
+    /* The position cannot be retrieved when the overlay is not shown. */
+    hr = IDirectDrawSurface_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(hr == DDERR_OVERLAYNOTVISIBLE, "Got unexpected hr %#x.\n", hr);
+    ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+    ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+
+    IDirectDrawSurface_Release(primary);
+    IDirectDrawSurface_Release(overlay);
+done:
+    IDirectDraw2_Release(ddraw);
+    DestroyWindow(window);
+}
+
 START_TEST(ddraw2)
 {
     IDirectDraw2 *ddraw;
@@ -9599,4 +9692,5 @@ START_TEST(ddraw2)
     test_lockrect_invalid();
     test_yv12_overlay();
     test_offscreen_overlay();
+    test_overlay_rect();
 }
diff --git a/dlls/ddraw/tests/ddraw4.c b/dlls/ddraw/tests/ddraw4.c
index 1be75c29a0d..950d4582afc 100644
--- a/dlls/ddraw/tests/ddraw4.c
+++ b/dlls/ddraw/tests/ddraw4.c
@@ -10692,6 +10692,99 @@ done:
     DestroyWindow(window);
 }
 
+static void test_overlay_rect(void)
+{
+    IDirectDrawSurface4 *overlay, *primary;
+    DDSURFACEDESC2 surface_desc;
+    RECT rect = {0, 0, 64, 64};
+    IDirectDraw4 *ddraw;
+    LONG pos_x, pos_y;
+    HRESULT hr, hr2;
+    HWND window;
+    HDC dc;
+
+    window = CreateWindowA("static", "ddraw_test", WS_OVERLAPPEDWINDOW,
+            0, 0, 640, 480, 0, 0, 0, 0);
+    ddraw = create_ddraw();
+    ok(!!ddraw, "Failed to create a ddraw object.\n");
+    hr = IDirectDraw4_SetCooperativeLevel(ddraw, window, DDSCL_NORMAL);
+    ok(SUCCEEDED(hr), "Failed to set cooperative level, hr %#x.\n", hr);
+
+    if (!(overlay = create_overlay(ddraw, 64, 64, MAKEFOURCC('U','Y','V','Y'))))
+    {
+        skip("Failed to create a UYVY overlay, skipping test.\n");
+        goto done;
+    }
+
+    memset(&surface_desc, 0, sizeof(surface_desc));
+    surface_desc.dwSize = sizeof(surface_desc);
+    surface_desc.dwFlags = DDSD_CAPS;
+    surface_desc.ddsCaps.dwCaps = DDSCAPS_PRIMARYSURFACE;
+    hr = IDirectDraw4_CreateSurface(ddraw, &surface_desc, &primary, NULL);
+    ok(SUCCEEDED(hr), "Failed to create surface, hr %#x.\n",hr);
+
+    /* On Windows 7, and probably Vista, UpdateOverlay() will return
+     * DDERR_OUTOFCAPS if the dwm is active. Calling GetDC() on the primary
+     * surface prevents this by disabling the dwm. */
+    hr = IDirectDrawSurface4_GetDC(primary, &dc);
+    ok(SUCCEEDED(hr), "Failed to get DC, hr %#x.\n", hr);
+    hr = IDirectDrawSurface4_ReleaseDC(primary, dc);
+    ok(SUCCEEDED(hr), "Failed to release DC, hr %#x.\n", hr);
+
+    /* The dx sdk sort of implies that rect must be set when DDOVER_SHOW is
+     * used. This is not true in Windows Vista and earlier, but changed in
+     * Windows 7. */
+    hr = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_SHOW, NULL);
+    ok(hr == DD_OK || hr == DDERR_INVALIDPARAMS, "Got unexpected hr %#x.\n", hr);
+
+    /* Show that the overlay position is the (top, left) coordinate of the
+     * destination rectangle. */
+    OffsetRect(&rect, 32, 16);
+    hr = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface4_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    ok(pos_x == rect.left, "Got unexpected pos_x %d, expected %d.\n", pos_x, rect.left);
+    ok(pos_y == rect.top, "Got unexpected pos_y %d, expected %d.\n", pos_y, rect.top);
+
+    /* Passing a NULL dest rect sets the position to 0/0. Visually it can be
+     * seen that the overlay overlays the whole primary(==screen). */
+    hr2 = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, NULL, 0, NULL);
+    ok(hr2 == DD_OK || hr2 == DDERR_INVALIDPARAMS || hr2 == DDERR_OUTOFCAPS, "Got unexpected hr %#x.\n", hr2);
+    hr = IDirectDrawSurface4_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    if (SUCCEEDED(hr2))
+    {
+        ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+        ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+    }
+    else
+    {
+        ok(pos_x == 32, "Got unexpected pos_x %d.\n", pos_x);
+        ok(pos_y == 16, "Got unexpected pos_y %d.\n", pos_y);
+    }
+
+    /* The position cannot be retrieved when the overlay is not shown. */
+    hr = IDirectDrawSurface4_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface4_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(hr == DDERR_OVERLAYNOTVISIBLE, "Got unexpected hr %#x.\n", hr);
+    ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+    ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+
+    IDirectDrawSurface4_Release(primary);
+    IDirectDrawSurface4_Release(overlay);
+done:
+    IDirectDraw4_Release(ddraw);
+    DestroyWindow(window);
+}
+
 START_TEST(ddraw4)
 {
     IDirectDraw4 *ddraw;
@@ -10781,4 +10874,5 @@ START_TEST(ddraw4)
     test_lockrect_invalid();
     test_yv12_overlay();
     test_offscreen_overlay();
+    test_overlay_rect();
 }
diff --git a/dlls/ddraw/tests/ddraw7.c b/dlls/ddraw/tests/ddraw7.c
index d6598fe6922..216ce38a6ea 100644
--- a/dlls/ddraw/tests/ddraw7.c
+++ b/dlls/ddraw/tests/ddraw7.c
@@ -10971,6 +10971,99 @@ done:
     DestroyWindow(window);
 }
 
+static void test_overlay_rect(void)
+{
+    IDirectDrawSurface7 *overlay, *primary;
+    DDSURFACEDESC2 surface_desc;
+    RECT rect = {0, 0, 64, 64};
+    IDirectDraw7 *ddraw;
+    LONG pos_x, pos_y;
+    HRESULT hr, hr2;
+    HWND window;
+    HDC dc;
+
+    window = CreateWindowA("static", "ddraw_test", WS_OVERLAPPEDWINDOW,
+            0, 0, 640, 480, 0, 0, 0, 0);
+    ddraw = create_ddraw();
+    ok(!!ddraw, "Failed to create a ddraw object.\n");
+    hr = IDirectDraw7_SetCooperativeLevel(ddraw, window, DDSCL_NORMAL);
+    ok(SUCCEEDED(hr), "Failed to set cooperative level, hr %#x.\n", hr);
+
+    if (!(overlay = create_overlay(ddraw, 64, 64, MAKEFOURCC('U','Y','V','Y'))))
+    {
+        skip("Failed to create a UYVY overlay, skipping test.\n");
+        goto done;
+    }
+
+    memset(&surface_desc, 0, sizeof(surface_desc));
+    surface_desc.dwSize = sizeof(surface_desc);
+    surface_desc.dwFlags = DDSD_CAPS;
+    surface_desc.ddsCaps.dwCaps = DDSCAPS_PRIMARYSURFACE;
+    hr = IDirectDraw7_CreateSurface(ddraw, &surface_desc, &primary, NULL);
+    ok(SUCCEEDED(hr), "Failed to create surface, hr %#x.\n",hr);
+
+    /* On Windows 7, and probably Vista, UpdateOverlay() will return
+     * DDERR_OUTOFCAPS if the dwm is active. Calling GetDC() on the primary
+     * surface prevents this by disabling the dwm. */
+    hr = IDirectDrawSurface7_GetDC(primary, &dc);
+    ok(SUCCEEDED(hr), "Failed to get DC, hr %#x.\n", hr);
+    hr = IDirectDrawSurface7_ReleaseDC(primary, dc);
+    ok(SUCCEEDED(hr), "Failed to release DC, hr %#x.\n", hr);
+
+    /* The dx sdk sort of implies that rect must be set when DDOVER_SHOW is
+     * used. This is not true in Windows Vista and earlier, but changed in
+     * Windows 7. */
+    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_SHOW, NULL);
+    ok(hr == DD_OK || hr == DDERR_INVALIDPARAMS, "Got unexpected hr %#x.\n", hr);
+
+    /* Show that the overlay position is the (top, left) coordinate of the
+     * destination rectangle. */
+    OffsetRect(&rect, 32, 16);
+    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    ok(pos_x == rect.left, "Got unexpected pos_x %d, expected %d.\n", pos_x, rect.left);
+    ok(pos_y == rect.top, "Got unexpected pos_y %d, expected %d.\n", pos_y, rect.top);
+
+    /* Passing a NULL dest rect sets the position to 0/0. Visually it can be
+     * seen that the overlay overlays the whole primary(==screen). */
+    hr2 = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, 0, NULL);
+    ok(hr2 == DD_OK || hr2 == DDERR_INVALIDPARAMS || hr2 == DDERR_OUTOFCAPS, "Got unexpected hr %#x.\n", hr2);
+    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(SUCCEEDED(hr), "Failed to get overlay position, hr %#x.\n", hr);
+    if (SUCCEEDED(hr2))
+    {
+        ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+        ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+    }
+    else
+    {
+        ok(pos_x == 32, "Got unexpected pos_x %d.\n", pos_x);
+        ok(pos_y == 16, "Got unexpected pos_y %d.\n", pos_y);
+    }
+
+    /* The position cannot be retrieved when the overlay is not shown. */
+    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_HIDE, NULL);
+    ok(SUCCEEDED(hr), "Failed to update overlay, hr %#x.\n", hr);
+    pos_x = -1; pos_y = -1;
+    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &pos_x, &pos_y);
+    ok(hr == DDERR_OVERLAYNOTVISIBLE, "Got unexpected hr %#x.\n", hr);
+    ok(!pos_x, "Got unexpected pos_x %d.\n", pos_x);
+    ok(!pos_y, "Got unexpected pos_y %d.\n", pos_y);
+
+    IDirectDrawSurface7_Release(primary);
+    IDirectDrawSurface7_Release(overlay);
+done:
+    IDirectDraw7_Release(ddraw);
+    DestroyWindow(window);
+}
+
 START_TEST(ddraw7)
 {
     HMODULE module = GetModuleHandleA("ddraw.dll");
@@ -11071,4 +11164,5 @@ START_TEST(ddraw7)
     test_lockrect_invalid();
     test_yv12_overlay();
     test_offscreen_overlay();
+    test_overlay_rect();
 }
diff --git a/dlls/ddraw/tests/overlay.c b/dlls/ddraw/tests/overlay.c
deleted file mode 100644
index 3e7b807f713..00000000000
--- a/dlls/ddraw/tests/overlay.c
+++ /dev/null
@@ -1,165 +0,0 @@
-/*
- * Unit tests for DirectDraw overlay functions
- *
- * Copyright (C) 2008,2011 Stefan Dösinger for CodeWeavers
- *
- * This library is free software; you can redistribute it and/or
- * modify it under the terms of the GNU Lesser General Public
- * License as published by the Free Software Foundation; either
- * version 2.1 of the License, or (at your option) any later version.
- *
- * This library is distributed in the hope that it will be useful,
- * but WITHOUT ANY WARRANTY; without even the implied warranty of
- * MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the GNU
- * Lesser General Public License for more details.
- *
- * You should have received a copy of the GNU Lesser General Public
- * License along with this library; if not, write to the Free Software
- * Foundation, Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301, USA
- */
-#define COBJMACROS
-
-#include "wine/test.h"
-#include "ddraw.h"
-#include "unknwn.h"
-
-static HRESULT (WINAPI *pDirectDrawCreateEx)(GUID *driver_guid,
-        void **ddraw, REFIID interface_iid, IUnknown *outer);
-
-static IDirectDraw7 *ddraw = NULL;
-static IDirectDrawSurface7 *primary = NULL;
-
-static IDirectDrawSurface7 *create_overlay(DWORD width, DWORD height, DWORD format) {
-    DDSURFACEDESC2 ddsd;
-    HRESULT hr;
-    IDirectDrawSurface7 *ret;
-
-    memset(&ddsd, 0, sizeof(ddsd));
-    ddsd.dwSize = sizeof(ddsd);
-    ddsd.dwFlags = DDSD_CAPS | DDSD_HEIGHT | DDSD_WIDTH | DDSD_PIXELFORMAT;
-    ddsd.dwWidth = width;
-    ddsd.dwHeight = height;
-    ddsd.ddsCaps.dwCaps = DDSCAPS_OVERLAY;
-    U4(ddsd).ddpfPixelFormat.dwSize = sizeof(U4(ddsd).ddpfPixelFormat);
-    U4(ddsd).ddpfPixelFormat.dwFlags = DDPF_FOURCC;
-    U4(ddsd).ddpfPixelFormat.dwFourCC = format;
-    hr = IDirectDraw7_CreateSurface(ddraw, &ddsd, &ret, NULL);
-    if(FAILED(hr)) return NULL;
-    else return ret;
-}
-
-static BOOL CreateDirectDraw(void)
-{
-    HRESULT hr;
-    DDSURFACEDESC2 ddsd;
-    IDirectDrawSurface7 *overlay = NULL;
-    HMODULE hmod = GetModuleHandleA("ddraw.dll");
-
-    pDirectDrawCreateEx = (void*)GetProcAddress(hmod, "DirectDrawCreateEx");
-    if (!pDirectDrawCreateEx) {
-        win_skip("DirectDrawCreateEx is not available\n");
-        return FALSE;
-    }
-
-    hr = pDirectDrawCreateEx(NULL, (void**)&ddraw, &IID_IDirectDraw7, NULL);
-    ok(hr == DD_OK || hr == DDERR_NODIRECTDRAWSUPPORT, "DirectDrawCreateEx returned: %x\n", hr);
-    if (!ddraw) {
-        trace("DirectDrawCreateEx() failed with an error %x\n", hr);
-        return FALSE;
-    }
-
-    hr = IDirectDraw_SetCooperativeLevel(ddraw, NULL, DDSCL_NORMAL);
-    ok(hr == DD_OK, "SetCooperativeLevel returned: %x\n", hr );
-
-    memset(&ddsd, 0, sizeof(ddsd));
-    ddsd.dwSize = sizeof(ddsd);
-    ddsd.dwFlags = DDSD_CAPS;
-    ddsd.ddsCaps.dwCaps = DDSCAPS_PRIMARYSURFACE;
-    hr = IDirectDraw7_CreateSurface(ddraw, &ddsd, &primary, NULL);
-    if (FAILED(hr)) {
-        IDirectDraw7_Release(ddraw);
-        trace("IDirectDraw7_CreateSurface() failed with an error %x\n", hr);
-        return FALSE;
-    }
-
-    overlay = create_overlay(64, 64, MAKEFOURCC('U','Y','V','Y'));
-    if (!overlay) {
-        IDirectDrawSurface7_Release(primary);
-        IDirectDraw7_Release(ddraw);
-        skip("Failed to create an overlay - assuming not supported\n");
-        return FALSE;
-    }
-    IDirectDraw7_Release(overlay);
-
-    return TRUE;
-}
-
-static void rectangle_settings(void) {
-    IDirectDrawSurface7 *overlay = create_overlay(64, 64, MAKEFOURCC('U','Y','V','Y'));
-    HRESULT hr, hr2;
-    RECT rect = {0, 0, 64, 64};
-    LONG posx, posy;
-
-    /* The dx sdk sort of implies that rect must be set when DDOVER_SHOW is used. This is not true
-     * in Windows Vista and earlier, but changed in Win7 */
-    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
-    ok(hr == DD_OK, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr);
-    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_HIDE, NULL);
-    ok(hr == DD_OK, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr);
-    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, DDOVER_SHOW, NULL);
-    ok(hr == DD_OK || hr == DDERR_INVALIDPARAMS, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr);
-
-    /* Show that the overlay position is the (top, left) coordinate of the dest rectangle */
-    rect.top += 16;
-    rect.left += 32;
-    rect.bottom += 16;
-    rect.right += 32;
-    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_SHOW, NULL);
-    ok(hr == DD_OK, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr);
-    posx = -1; posy = -1;
-    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &posx, &posy);
-    ok(hr == DD_OK, "IDirectDrawSurface7_GetOverlayPosition failed with hr=0x%08x\n", hr);
-    ok(posx == rect.left && posy == rect.top, "Overlay position is (%d, %d), expected (%d, %d)\n",
-       posx, posy, rect.left, rect.top);
-
-    /* Passing a NULL dest rect sets the position to 0/0 . Visually it can be seen that the overlay overlays the whole primary(==screen)*/
-    hr2 = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, NULL, 0, NULL);
-    ok(hr2 == DD_OK || hr2 == DDERR_INVALIDPARAMS
-            || hr2 == DDERR_OUTOFCAPS, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr2);
-    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &posx, &posy);
-    ok(hr == DD_OK, "IDirectDrawSurface7_GetOverlayPosition failed with hr=0x%08x\n", hr);
-    if (SUCCEEDED(hr2))
-    {
-        ok(posx == 0 && posy == 0, "Overlay position is (%d, %d), expected (%d, %d)\n",
-                posx, posy, 0, 0);
-    }
-    else
-    {
-        /* Otherwise the position remains untouched */
-        ok(posx == 32 && posy == 16, "Overlay position is (%d, %d), expected (%d, %d)\n",
-                posx, posy, 32, 16);
-    }
-    /* The position cannot be retrieved when the overlay is not shown */
-    hr = IDirectDrawSurface7_UpdateOverlay(overlay, NULL, primary, &rect, DDOVER_HIDE, NULL);
-    ok(hr == DD_OK, "IDirectDrawSurface7_UpdateOverlay failed with hr=0x%08x\n", hr);
-    posx = -1; posy = -1;
-    hr = IDirectDrawSurface7_GetOverlayPosition(overlay, &posx, &posy);
-    ok(hr == DDERR_OVERLAYNOTVISIBLE, "IDirectDrawSurface7_GetOverlayPosition failed with hr=0x%08x\n", hr);
-    ok(posx == 0 && posy == 0, "Overlay position is (%d, %d), expected (%d, %d)\n",
-       posx, posy, 0, 0);
-
-    IDirectDrawSurface7_Release(overlay);
-}
-
-START_TEST(overlay)
-{
-    if(CreateDirectDraw() == FALSE) {
-        skip("Failed to initialize ddraw\n");
-        return;
-    }
-
-    rectangle_settings();
-
-    if(primary) IDirectDrawSurface7_Release(primary);
-    if(ddraw) IDirectDraw7_Release(ddraw);
-}