Image setting in UV Project Modifier I'm trying to understand the use of the "Image" option and how it works with the "Override" box on the UV Project Modifier. I'm using this file to test.



(there is a scene for BLender Internal and one for Cycles) 

Is there a setting I'm overlooking?



Blender Internal

If I select an image on the modifier, and click the "Override Image" box, the selected image will only get displayed on the object if "Multitexture" Shading is enabled. If I hit render I get the original texture, not the one projected by the modifier (even if the box is checked in the material->Options->UV Project) The original texture is indeed using the projector's coordinates.

Multitexture



In GLSL shading the Image option has no effect: the selected image never gets displayed projected over, and the object keeps its original texture regardless of the state of the Override box.



Cycles 

Here the image setting has no visible effect either .



In any case, I can't make the image selected on the modifier show up for preview or in the final render, even if the modifier is applied... So what is the purpose of selecting an image in this box?
So what actually the UV Project modifier does is only manipulates UV coordinates. Without an UV map it won't work. The Override option will work only in Multitexture, it can't override material textures, only textures displayed on mesh faces.

All the stuff about view-port visibility and what renders is nor related to this modifier but rather to how blender works.


Multi-texture Blender Internal:

In view-port Blender is able to preview textures without any materials applied - just the ones in the UV/Image editor. In render it uses materials. That's why view-port and render differs. The UV mapping is altered with the UV Project modifier - it is altered for both render and view-port.
Cycles and GLSL Blender Internal:

In view-port Blender previews material textures. If a texture is not in a material, you can't see it on the model.

For Blender Internal materials there is UV Project option to ensure correct UV interpolation for UV Project modifier. For both GLSL and Cycles the material mapping should be UV:






If you setup a material for Multitexture the same way like for GLSL it will work in render.



Everything is correct in your .blend, it's just that you expected the UV Project modifier to override material textures, which is not the case, and you need to use the "AB" texture instead of "B" in your shaders.