XeTeX font spacing awfulness

Question

When using the Lato font (e.g., Google fonts or Lato fonts), I get completely overlapping text:

When I view the PDF in Google Chrome's PDF viewer, it looks fine on the screen:

but it still prints like the bad version, and I am really only concerned with the printed output for this document.

This is what I'm using to produce the above:

\documentclass{article}
\usepackage{fontspec}
\setmainfont{Baskerville}
\newfontfamily\kgtitlefont[Scale=2]{Lato}
\begin{document}
{\kgtitlefont{This would make a good title}}\\
This would make good text.
\end{document}

I know that this is XeTeX-specific because if I use LuaTeX (through TeXworks or TeXShop in both cases), the Lato looks fine, but LuaTeX can't find Baskerville:

luaotfload | Updating the font names database:
luaotfload | Scanning TEXMF fonts...
luaotfload | Scanning OS fonts...
luaotfload | Font names database saved: %s 
: /Users/kayhan/Library/texlive/2012/texmf-var/luatex-cache/generic/names/otfl-
names.lua

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
./testroboto.tex:3: fontspec error: "font-not-found"
! 
! The font "Baskerville" cannot be found.
! 
! See the fontspec documentation for further information.
! 
! For immediate help type H <return>.
!...............................................  

l.3 \setmainfont{Baskerville}

I would rather fix Lato in XeTeX, but would be okay with fixing Baskerville in LuaTeX.

I am fairly experienced with LaTeX on Linux, but am relatively new to XeTeX, fontspec, and Mac OS X.

Update: I have TeX Live 2012 Version beta-0.70.2-2012062819 (TeX Live 2012) and the baskerville font I have is a ttc, so that this may be the problem. The XeLaTeX problem appears in adobe acroreader and preview. It does not appear in chrome, though. I will try to update TeX Live on my 10.8.5 system and see what happens. It will take a little time to download this. I'll report back when done.

Update 2: After installing TeX Live 2013 (thank you BitTorrent!), I can get the document to work with Lua(La)TeX (i.e., get LuaTeX to find and use the Baskerville .ttc font I have), but with XeTeX, the font spacing is still messed up. Note that the Scale=2 option does not change anything. The following also produces illegible font spacing with XeTeX:

\documentclass{article}
\usepackage{fontspec}
\setmainfont{Baskerville}
\newfontfamily\kgtitlefont{Lato}
\begin{document}
{\kgtitlefont{This would make a good title}}\\
This would make good text.
\end{document}

So I have a good work-around (Use LuaTeX instead of XeTeX), I am still interested in getting it to work with XeTeX, if only to understand better how it works.

Update 3: After reading @Nils L.'s comment, here is an even more minimal working example:

\documentclass{article}
\usepackage{fontspec}
\setmainfont{Lato}
\begin{document}
This is even more minimal.
\end{document}

which produces the following:

Note that in some PDF viewers (TeXWorks, Google Chrome) it looks fine on the screen, but with most PDF viewers (acroread, preview, safari) it looks awful on the screen. For all PDF viewers it prints incorrectly.

Update 4: When changing \setmainfont{Lato} to \setmainfont{Lato-Reg.ttf}, it works correctly. I don't understand why this makes a difference, but I guess I have a lot to learn about fontspec.