Insulation, Radiant and Vapor Barriers - insulating a 2nd floor overhang

I am in the process of residing my house, a 2 story colonial. The 2nd floor overhangs the first floor by 2'. I removed the sofit on this overhang and found that the insulation was paper side out. I can't be sure but I thought the paper should go towards the heat source. Also, I am using Dow house wrap and I was wondering if I could fold the wrap under the overhang or would this create a double barrier and cause moisture problems.
Thanks
John

The house wrap will not cause a moisture problem. Having the vapor barrier on the wrong side can.

Thank you!

I just purchased R 30 insulation; the old insulation was a bit moldy. My plan is to put a Styrofoam venting material to keep the insulation a little off the sub floor. I'm thinking that this will allow worm air from the house to the sub floor. Then install the new insulation paper side up then fold the dow weathermate house wrap up and under the overhang finished by sheets of a 1/2" X 2' X 8' sheets of azak trim.
Do you see any problems with this plan?
Thanks again
John

Skip the Styrofoam venting

http://www.eere.energy.gov/consumer/your_home/insulation_airsealing/index.cfm/mytopic=11810

and depending what part of the country you are from, put the vapor barrier accordingly.