Do you catch the prepare-xwindow-id message from a sync bus handler and set the window id from there? Or do you use a normal (async) message handler?

I catch it in async message handler (set using gst_bus_add_watch()). I also thought of sync handler, but as documentation reads, it's mainly for plugin developers and not for application, so I refused to do this way. Interesting that xvimagesink always manages to receive window-id while the code is quite similar (window-id check is almost right after posting bus message).

You must do it from a sync message handler for this message as written in the xoverlay/videooverlay documentation. Otherwise this will sometimes work, sometimes not. The sink requires the window id to be set after gst_element_post_message() returned, and this is only guaranteed with a sync handler.