Does it fix the crash of Source games when opening the in-game overlay? Did anyone test this?

Personally, I had quite a lot of issues getting the nvidia drivers to work properly. Might have been an issue on my side of things don‘t know.

Distro doesn’t really matter nowadays. You can get all desktop environments to work on most distros. Especially the big players like KDE, Gnome, Xfce have hundred distros they are shipped with by default. Most big distros have versions for each of the most popular desktop environments. Therefore, I would suggest that you look for the distro which fits your needs best and then install the desktop environment you want to work with afterwards, if there isn’t a flavor of your distro that ships with it already.