Does 4.1 fix GC overwriting F5 alarms issue?

It's unlikely - the issue is still present in the 4.0.2 beta and 4.1 will just be the production version of the beta.
Also, in speaking with the development team they made it clear that it's an issue with Connect and that the Connect team will need to sort it out, so it's unlikely that a firmware release will fix the problem.
Keep an eye out for the next time the Connect app gets updated and hopefully that will solve the problems.

Just to be clear - it's not just the alarms that get over-written. EVERY setting that can be done on either the watch or the app gets overwritten (so profile data as well for example). But to be fair the only one you're ever likely to change often on the watch is your alarms.

Everything Carl has just written aligns with the responses I had to this issue from the Fenix beta folks at Garmin. The only thing I'd add is that it's a change in the Garmin Connect website/ecosystem that you'll need to keep an eye out for, rather than the Garmin Connect Mobile app (settings/alarms are overwritten when syncing via Garmin Express or direct wifi, so it's the whole Garmin Connect ecosystem that needs to be fixed).

Everything Carl has just written aligns with the responses I had to this issue from the Fenix beta folks at Garmin. The only thing I'd add is that it's a change in the Garmin Connect website/ecosystem that you'll need to keep an eye out for, rather than the Garmin Connect Mobile app (settings/alarms are overwritten when syncing via Garmin Express or direct wifi, so it's the whole Garmin Connect ecosystem that needs to be fixed).

Thanks for that clarification. I don't have a wi-fi model so I wasn't sure if the website settings could directly over-write the watch settings or if it was due to syncing with the app.

I wish they would just remove alarms from GCM altogether

If I had to choose between settings alarms on the watch and on GCM, I'd choose the watch any day. Having the function in GCM and letting it confusingly overwrite the alarms you set in the watch is super confusing, and when you're camping and have spotty service, it's even more so, because you can't even load the app most of the time. But maybe it will load and change your alarm settings while you're sleeping, and cause all kinds of problems. I ended up putting my phone in airplane mode before a triathlon just so my Fenix 5 wouldn't connect to GCM and mess up my alarms before the big race. Terrible bug, if it can even be called that.

Just simplify and make alarms watch-only. Works great.

If I had to choose between settings alarms on the watch and on GCM, I'd choose the watch any day. Having the function in GCM and letting it confusingly overwrite the alarms you set in the watch is super confusing, and when you're camping and have spotty service, it's even more so, because you can't even load the app most of the time. But maybe it will load and change your alarm settings while you're sleeping, and cause all kinds of problems. I ended up putting my phone in airplane mode before a triathlon just so my Fenix 5 wouldn't connect to GCM and mess up my alarms before the big race. Terrible bug, if it can even be called that.

Just simplify and make alarms watch-only. Works great.

I would second to this feedback. A watch only setting for the alarms makes more sense than setting over the GCM.

To start, let's assume that this situation has gone on long enough now and it isn't all a big bug in the 2 way sync of settings and alarms between the watch and Garmin Connect (GC). Thus we further assume Garmin always intended the device settings/alarms in GC to overwrite whatever was on the watch on sync, by design (a 'one way' only GC to watch sync where GC 'always wins' in the sync); albeit a rubbish design!

With the background/assumption above, the suggestion I have already submitted to Garmin, via the share ideas portal http://www8.garmin.com/contactUs/ideas/ , is that both the GC website and GCM phone app simply have a "Send to Device" button (the same as Courses and Workouts already have). That way you can change device settings/alarms on the GC website and or GCM app if you like, but those settings only get sent to the watch when that "Send to Device" button is pressed. This is exactly the way GC works for sending Courses and Workouts to the watch; you set up the Course/Workout in GC, then you press "Send to Device" (GC doesn't just sync all your Courses and Workouts to your devices without you telling it to). With that simple protocol implemented in GC, those of us who much prefer configuring settings/alarms directly on the watch won't have our settings/alarms overwritten with whatever is in GC every time we sync. Simple!

So if you think that's a sensible solution, then please use the ideas portal link above. Garmin do listen to ideas through that portal; foot pod pace and distance support during an outdoor GPS recording activity, was eventually added to the Fenix 3, after swathes of us on the forum had requested that feature to be added through the ideas portal.

Edit: If anyone is interested, this is the text I've submitted to the Garmin Ideas Portal; should anyone wish to copy and paste.....
I have a Fenix 5. I am utterly fed-up with the old device settings and alarms in Garmin Connect (and therefore Garmin Connect Mobile also) automatically overwriting the more recent device settings and alarms that I have directly configured on the watch. I can only assume this behaviour is not a bug in a 2 way sync between Garmin Connect and the Device, but is a 'one way only Connect to device' sync by design, as so many people (on the Garmin Forums) have reported it to Garmin Support and nothing has happened. So my suggestion is simple; add a "Send to Device" button for device settings and alarms in Garmin Connect and Garmin Connect Mobile, so the settings and alarms only get sent to the device on sync when that button has been pressed. This would stop settings/alarms manually entered on the watch being overwritten, unless the user has consciously pressed that "Send to Device" button in Garmin Connect. This is exactly how Courses and Workouts are sent to a device from Garmin Connect, so it should be straight forward to do the same for settings and alarms.

A proper 'all ways' sync where 'newest change wins' would be ideal, but it seems that's just not the way the Garmin Connect platform was built.

Another thing to note, this issue has nothing to do with the Fenix 5 hardware or software; other recent Garmin devices are equally impacted. This is absolutely an issue with the broader Garmin Connect ecosystem.

This is a bug, not a bad design as neither the Fenix 3 nor the Fenix 3 HR had this issue, it is really bad that isn't acknowledged.

This is a bug, not a bad design as neither the Fenix 3 nor the Fenix 3 HR had this issue, it is really bad that isn't acknowledged.

Correct me if I'm wrong (I no longer have my F3 to confirm this) but I don't recall being able to set Alarms via Connect for my Fenix 3. I'm pretty sure you could only set them on the watch. In fact I'm reasonably sure I even requested this feature to be added... now I'm kind of wishing they hadn't implemented it.

They have acknowledged it's a bug - or at least the firmware team are aware of it and know that it's on the Connect team to fix.

What these forums are missing though is a sticky thread with a list of all the known bugs that haven't been fixed...