You mention that your enemies are "clones" of each other, which is fine. Is each "clone" though, just a SINGLE enemy as the sprite or do you have like 2 or 3 enemies per sprite that act as one object?
If each enemy is it's own individual "clone" then you simply need to use object picking nearest/furthest as mentioned by celstrider. He basically explained in a shorter way what I was talking about in my post before. Just pick the enemy that's closest to your defender, and apply the damage to that enemy only (because you picked it specifically based on it's distance to the defending player).
I think the reason that it's damaging ALL units right now, if because it hasn't been told to pick ONE unit specifically.
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If overlapping ENEMY
-> deal damage to enemy
This will cause ALL enemies to be damaged when only ONE enemy is being overlapped.
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If overlapping enemy & distance to enemy is less than 10
-> deal damage to enemy
This will cause only enemies that are within 10 pixels of you to take damage.
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If overlapping enemy
-> pick enemy closest to player
---> deal damage to enemy
This will cause only the enemy that's closest to the player/defender/arrow to take damage.
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The key is to make sure the game knows WHICH enemy you want it to pick, otherwise it will simply pick them ALL whenever there is overlapping.
Hopefully this helps a bit more
~Sol