Actually the rules you quote do not say that points and stay credit should not be awarded on overlapping stays. The portion you quoted requires that a member stay in the room for it to be a qualifying stay. The rules do not require that a member stay in the room at all times during a qualifying stay.

If I have a 2-night weekend stay out of town nested inside a 14-day stay, and I stay in both rooms at some point during both of those stays, the plain text of the T&Cs read such that I should earn credit for both stays.

I realize that, in practice, Marriott denies points and night credit for nested overlapping stays. But this practice is contrary to the T&Cs as long as both rooms are occupied by the member at some point during the stays. Marriott is cheating people, violating its own T&Cs, and deserves to be sued.

If Marriott were taken to court over this (and I hope they are), they should lose.