describe answer

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That file is a script which compiled by IE.
When page is loaded script begins collecting variables for future borders.
One of the variable is position of element which require rounded borders and it is what answer was based on.
So script looks for parent element with CSS rule "position:relative;" and adds the shapes (you can see when script adds shapes one-by-one).
At start script was unable to find CSS rule, therefore by default it adds shapes to <body> at the end and it means bottom layer.
You placed shapes in correct  #wrap <div>, and made this script compile only by IE7, IE8 and NOT IE9.
So it works as it should and where it should and in correct layer.

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