Refer'd Issue:
An-Sar/Cyberware#110

Minecraft: 1.12.2
Forge: 14.23.5.2838

Mods: 3
cyberware-1.12.2-0.2.11.20
jei_1.12.2-4.15.0.279
Metallurgy-4-Reforged-0.2.2

The "Targeting Overlay" is a augment which when paired with the Cyber Eyes & Hud Jack augments... it will highlight any mobs within range... however if Metallurgy is installed... this highlight will no longer render. Some screenshots...

If Cyberware + Metallurgy is installed... no highlighter on the Sheep.

If Metallurgy isn't installed... the highlighter works as intended. The Sheep has an outline as well as two more mobs in the distance.

Note: The Augment Wheel is shown as the augments are 'enabled'. If they weren't... it'll have the option to 'enable' them, not 'disable'.

Apparently if wearing the Mithril Set from Metallurgy which causes mobs to become highlighted & having the Targeting Overlay enabled... some weird stuff occurs.

If wearing the armor... the Targeting Overlay highlights mobs... but only if they're far away. If you get close to them... then the highlighter will disappear on them. If you disable the Targeting Overlay... the highlighter will show due to the Mithril Armor's passive but with less distance.

I wonder if these two are somewhat fighting over what to do for highlighting mobs. Just making a guess here.