I've installed multiple 1231 cameras at a school. Your image is not normal. Looks like you are viewing through a fog bank. The IR reflection looks to me to be a defect in the alignment, already mentioned here. While night time IR is certainly less clear than daytime and the nature of IR day/night creates a lot of noise, your picture is not normal. The focus adjustment of the varifocal lens is very VERY sensitive and it is easy to get it out of focus. Did you try to focus the camera at night?