Type O System and Adept....is it just me, or does this have potential for being overpowered?
Also, if one has Type O System and proceeds to buy alphaware, do they stack?

Well, 30 BP is a big price to pay, so maybe the reward is not overpowered. That being said, many in DS claim that (adept + 'ware) is the killer combination.

No stacking. Type O gives the same benefit as deltaware, no matter what 'ware is bought. You can buy alphaware, but it is a waste of money.

Also don't forget Type-O-System applies only to Basic Bioware. Cultured Bioware like synaptic boosters do not get the essence reduction.

where is the distinction of "basic" bioware?
there is "second hand" "cosmetic" "standard" and "cultured" but I can't find a "basic"

p. 338 SR4 or p. 347 SR4A
For some reason they renamed those implants that needn't be cultured standard Bioware in Augmentation. Now you can have two interpretations, either only the stuff from the BBB counts or everything that is not cultured.

Any bioware that is not listed as cultured, should be considered basic bioware. The only reason cultured bioware is cultured is because it modifies the nervous sysytem (ie brain, spinal column, nerves) of the metahuman body.