Was able to find a solution by investigating into this method:
"2. Moving the Weapon icon frame (the parent to the armor icon frame) up a few pixels and then the armor icon frame down a few pixels to remove the overlap"
Ended up having to copy the entire "InfoPaneHeroTemplate" ui layout and create a new template editing the weapon and armor icons offsets. Then making a custom UIlayout that is just a copy of the "InfoPaneHero" ui frame the "InfoPanel" Layout but referenced the new template i just made for it.
Result: Damage got moved up a tad so there was room for Armor to be moved down. No more overlapping damage.
Again. this is only an issue if you use the Warcraft Classic System dependency.