Whilst on ESTA I was stamped a 6 month B2 visa, would this be considered overstaying?

Let's view this through the lens of current US immigration law and then you can use your judgment to determine your course of action

Let's get this clear. In the case of KAMAL H. TURFAH, (Petitioner-Appellant),vrs UNITED STATES CITIZENSHIP AND IMMIGRATION SERVICES; UNITED STATES DEPARTMENT OF HOMELAND SECURITY,(Respondents-Appellees), the UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT ruled that when an immigrant is erroneously given an immigration benefit by USCIS, it does not change the illegality.

Of course the court sympathized with the immigrant and suggested to USCIS to try to find a way to find a creative way to fix the problem by essentially backdating via a Nunc pro tunc.

So if you were given six months (erroneously) on VWP and you stayed more than the three months, YES you overstayed although the fault lay with Immigration.

Now we need to settle the question of whether you INDEED stayed beyond 3 months. First you flew in to Houston without a visa so it clearly established you were on VWP.

It is clearly stated by the department of state that

If you are admitted to the United States under the VWP, you may take a short trip to Canada, Mexico, or a nearby island and generally be readmitted to the United States under the VWP for the remainder of the original 90 days granted upon your initial arrival in the United States. Therefore, the length of time of your total stay, including the short trip, must be 90 days or less

Note also the intent of the VWP:

The VWP is intended to be used for occasional, short visits to the US.

Upon your re-entry from Canada, you were given a three month stamp. Basically that was a new entry under the VWP, it superseded the previous six months stamp which was void anyway beyond 3 months.

Now per your statement, you stayed more than three months on this new VWP cycle entry, thus you overstayed. The second guard was ignorant, however his ignorance does not change the fact.

You can check your departure and arrival records here

Now to answer your questions in the order in which you asked them:

Did I actually overstay and if so do I have a valid reason due to the mistakes of officers?

YES you did, you have a valid reason however it doesn't change the law.

Was my ESTA activated on the date of my arrival in Houston or on the second time I arrived? If the former, would the second officer had stamped the wrong date also?

Yes initially activated on date of arrival, however it ended when the second officer stamped and another VWP cycle started. The second officer stamped the right date, another 3 months.

Would me being a temporary resident in Canada throughout this have any impact?

No it does not.

Do they record all movement between the U.S and Canada electronically? I recall multiple times coming and going and the officers not scanning my passport, only checking it as ID. This would be notable especially on the trip that I returned to the U.S. on the expired date, wouldn't that have flagged them?

No they don't record all

Since I flew out of Canada and not the U.S. does that prevent them from knowing my true departure?

No. USA and Canada share records. See here

And if I did get screwed over and get flagged because of all of this, would me flying into Canada and crossing over to the U.S. overland bar me, even though they don't seem to even check the passports there?

Like I said, you did overstay and thus technically you are barred and no longer allowed to use VWP.

SUMMARY

The choice is yours whether to risk coming on the VWP program next time. Considering your convoluted travel pattern, the chances may be slim that an officer at entry would off the bat see you violated however it can be easily verified. Of course even if discovered, some immigration officers will at their discretion ignore it considering the circumstances.

However during this time of heightened issues concerning immigration, I would advise you get a visa if you want to eliminate any risk of being removed next time you arrive. Yes you may have been misled by the ignorant officers however the immigration law is harsh.