Episodic memories are formed by hippocampal binding of the "what" and "where" features of everyday events. The hippocampus minimizes interference between related similar episodic memories by pattern separation. Stress and psychopathology are associated with lowered pattern separation. While current behavioral paradigms typically use correct rejections of single object or context lures rather than composite stimuli, it is not known if object and context pattern separation differentially associate with mental health. We reasoned that an object-in-context paradigm would be more sensitive to mental health state than current implementations, given increased task demands. We found that non-clinical depression and anxiety symptom severity were associated with reduced lure rejection for both object and context, and that only the object domain was associated with a concomitant increase in lure overgeneralization. Therefore, we argue that reduced lure rejection and increased overgeneralization must not be conflated. Although our object-in-context paradigm was not more sensitive to variation in mental health, we show that lure rejection and overgeneralization rate in one domain (e.g. object) was affected by the status of the other domain (e.g. context target versus lure). Finally, as several metrics of pattern separation exist in the literature, we evaluated the association of different metrics with mental health.