ID:141026
 
Code:
mob/proc/makeit()
var/obj/AA/I
I.pixel_y=32
src.overlays+=I


Problem description: I'm trying to make it so overlay "AA" appears above the mob... Thus make it so "AA" is src.y+=1... I just can't figure it out :(

That's correct except for the fact that you never actually created an object with New().
In response to Garthor
Ah.... I just changed the pixel_y in the object code... It worked that way too.