Correct - Overture is ep 1 and this is ep 2. They are both completely playable on their own though and utterly self-contained. Personally, I prefer the latter one and would suggest you play that.
It's not source engine. It's a custom built engine the designers built at university. The physics don't run on Havok or Ageia either, they use the free and open source Newton Physics Library. Because the engine was created at Uni and because they were hippy students at the time it also means the game is good for porting to Linux. The original is already available on Mac and Linux and this version should be ported very soon.
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ilol pick this one up i think been on the lookout for something new
Once I'm bored of COD4 I'll have a look at this :D
God I wish I could figure out how to run System Shock on this box.
I might have to check this game out when I get my new PC. Sounds quite interesting.