I may not be doing it the "right" way, but every time I take my bow out of the case I check to see if the string shows any signs of being dry, and if it does I wax it. It's usually every 3 months or so.
Excess wax can effect the bow's speed by increasing the weight of the string/cables. I have seen people that wax the serving (which isn't necessary) and get the tracks of the cam gummed up. I guess in an extreme case that might lend toward a derailment but I'm really reaching here. Short answer to your question is no, you can't wax too much, if you're doing it properly.
Sting wax helps to reduce friction that causes fraying. Also makes a water-tight seal. Before the season I'll put on a really good coating. Then throughout the season when I notice some string seperation ill just re-rub the string spreading out the wax thats already on the string.