could you try again with two windows with a large amount of overlap as described?

Works as expected.

$ xfwm4 --version
    This is xfwm4 version 4.12.3 (revision 7fdcb53) for Xfce 4.12
    Released under the terms of the GNU General Public License.
    Compiled against GTK+-2.24.30, using GTK+-2.24.30.

    Build configuration and supported features:
    - Startup notification support:                 Yes
    - XSync support:                                Yes
    - Render support:                               Yes
    - Xrandr support:                               Yes
    - Embedded compositor:                          Yes
    - KDE systray proxy (deprecated):               No

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