I have been struggled for the same problem for a while, and also found out currently there is no an ultimate solution to solve it. Though there are 3 methods I tried that each has its flaw to make censor visible:
1. Exactly what the developer said. Use the add monitor feature in VirtualDesktop so you have screen A and screen B both visible. Censor screen A with HotScreen and put the recordable window on screen B. The flaw is that your vr controllers can only interact with screen A which censor is not visible.
2. Put the recordable window on the same screen, and use third-parties application like WindowTop to make the recordable window always-on-top and can be clicked-through, also application like BorderlessGaming to full screen the recordable window so its position alligns to your actual screen. This method you can interact while the censor is visible, but the flaw is the censor is constantly flashing and flickering.
3. This method is quite complicated. First, use the add monitor feature in VirtualDesktop so you have screen A and screen B. Then, use third-parties application like OBS to capture a window (i.e. browser or video player) in screen A that you want to censor, and project it to screen B. Next, censor screen B with HotScreen, set the screen latency to 1, capture the overlay and project it back to screen A. Finally, use third-parties application like WindowTop to make the projected censor window always-on-top and can be clicked-through, and remember to select back the browser/video player as current window so you can interact. The flaw is that only 1 window instead of the whole screen can be censored, also you need to undo the always-on-top of the projected censor window so you can see other window and to adjust settings in HotScreen.
I hope my reply can help any user that want HotScreen to work in VirtualDesktop. Wish to have HotScreen fully functional in VR environment!