hmm, unless I'm missing something in your example, I did everything the same, but I wind up with this...
<img src="http://dl.dropbox.com/u/4075855/fog%20of%20war%20glitch.png">
the purple square is actually a monster from elsewhere on the map and the player doesn't show up at all...
I created the tiled background for the fog, on its own layer, and then created the vision object on the same layer, above the fog, applied erase, and in the events...
Always: "vision" set position to "player"
um...help?