The autofill should be on the catch basin for reliable operation. Maintaining a proper minimum water level in the catch basin is important for the operation of the edge pump and can not be reliably determined from measuring the pool. Putting the auto-fill on the pool can result in the edge pump losing prime, which can potentially damage the pump (which is, however, extremely unlikely if you run the edge pump regularly).
The whole situation is fairly complex, with a couple of different failure modes, so there are other approaches, including auto-fill at both levels, or more complex electronic systems with multiple water level sensors (which aren't all that common, but nice to have). The main advantage of the more complex systems are to control overflow during heavy rain and to compensate for high evaporation rates coupled with infrequent use of the edge pump.
The overflow you describe is probably a simple mis-calibration of your current fill system, though it is remotely possible that it is indicative of some more complex problem. I don't see a way it could be the result of the incorrect placement of the auto-fill system, which would have very different symptoms.