Hi, if you start the chat and it is set up correctly, it should already react to your channel. That is completely independent from the game capture for your stream overlay. That said, you should check out if you did everything mentioned under "Getting it ready". Then test it out in your chat and if it works you can capture it and place it on your stream overlay.
Sorry for the late response. Was offline for some time. ;) Hope it is still helpful.
Also a new Version will come in the next days, that pops emotes from the chat over your avatar.
Best regards