Do you have the sun directly hitting the lens?
Could be but if they are both behind the same glass this ca cause what the OP posted.It looks like the lens & LEDS ARE separated.
http://www.vitekcctv.com/images/lg/VTC-IRLED24A.jpg
I have experienced a similar halo effect in night shots. If your camera design is the same as mine, with the lens in the middle - surrounded by IRs, and a foam ring separating the 2... then try reseating the foam ring. If it's not tight to the glass then it will reflect on the glass giving the halo effect.
I have brightness, contrast, hue, and saturation controls. I played around with them the other day but was unable to get a better picture.About it being washed out -- the halo affect is probebly caused by the light ring... During the day -- do you have contrast & brightness controls you can adjust? The image also looks over-sharpened...
I will try swinging the camera around towards the back of the house tomorrow for a more balanced scene.The center of your screenshot is black, which causes auto-iris controls to brighten the image (washing out everything else)... What does it look like with a more ballanced scene?