Have any veterans hit road blocks with employment due to being overqualified? How do you combat this?

I 100% disagree. While it may often be used as a smoke screen for "too old", it is also a real issue from the hiring manager side of the table. Quite simply, If I am hiring for a "level 1" job, but you quite clearly are qualified for a "level 4" job, I have a very reasonable concern that:

1. You may not actually want to do the work hired for, but are expecting an internal promotion soon. Meaning you will either become disaffected or I will need to fill the job YET AGAIN. In my context, very senior programmers applying for junior programming or level 1 help desk jobs fall into the bucket.

2. Many people are not happy doing work that they feel is "below" their skills. Nor are they often happy taking guidance from those they feel they know more than. See every thread ever on RP about how 2LTs need to shut up and let the NCOs run things. Now I need to deal with workplace tension and/or fill the job YET AGAIN.

3. You USED to do this kind of work, but have been doing the next level up for so long, that you are no longer a fit for this actual work. If I were to interview for a computer programming job, this would be a very valid concern on the part of a potential employer. While a former computer programmer, I have been a MANAGER of programmers so long that I would need extensive training to again be current in my former role. This is true more often than the prospective employee is likely to admit. Now I need to FIRE/RETRAIN this individual or fill the job YET AGAIN.

4. As mentioned elsewhere in this thread, when money is tight, people may be willing to take any job, because $$. However, as soon as the desperation is gone, they may again be looking for another job. Which means I get to fill the job YET AGAIN.

All four of the above are real concerns, that I have seen play out over and over again in real civilian job environments. (I have also seen it as an excuse/cover for age discrimination) They are real, and from the organization's point of view, very significant. Hiring the right people is honestly the single most important thing I do in my civilian role (at least, once I get back to it again). If I do it well, my team ROCKS. If I do it poorly, I have a lot of headaches.

Are those four things always present? Absolutely not. I have seen many people take jobs that they were overqualified for, perform well, and stay there for years and years. One of my civilian peers actually took a 2 or 3 level demotion to come work for us. Essentially dropping from CIO level to managing a 20 person team that reported to someone who reported to a CIO. He, however, was able to answer the why question (I was on the panel that hired him) of why he wanted lesser responsibility. He has a big family, a child that has significant issues, a wife that he and kids he wanted to see sometimes. The schedule and stress of the old job were simply unsustainable for him. The hiring panel was able to make sense of why he would be cool with such a drop in pay.

That is something that older workers who have been in upper level management or other high paid positions hear a lot. They think that if you take their lower paying job you will still keep looking and will be gone the day that you find something else. In some cases they are also afraid that what you want is their job.

That is probably the best answer I have received so far, thank you. It has been bugging me because I just want to work in a place that I enjoy and right now I have a desk job and it is killing me.

The only way around it would be to try to find certain things within your resume that could possibly omitted or scaled down after all you don't want to show up to a place like Starbucks with a resume that would dazzle Dow Jones.

It is great advice actually! It is very tedious, but you really do need to tailor your resume for each and every position you apply for.