If someone stole your picture by stealing the entire URL (meaning where it is hosted) then that would be the only way you could make a change to the picture and have it show changed in their auction.
I'd doubt they did it that way...but there might be a chance.
To watermark a photo you could do it many different ways... One of the best ways would be with a program like Adobe Photoshop (granted it's very expensive) but it would allow you to place some semi-transparent text over top of your image.
Using other "free" software like the Paintbrush program in Windows for example... You could put some colored text across your images.
Just load your pictures into Paint, type your text, place it where it still allows the image to be seen, but deters others from ripping off your pictures and then save them...
That's about all there is to it...
Mike