Also getting the error message. Also, after "watermarking", the photo doesn't show a watermark after clicking the thumbnail in the saved images list. Or maybe it wouldn't show here anyway, as this may be the original image. If so, how do you check if the watermark "took"? Where is the watermarked image stored? Can you only see it on the active listing?
It's obvious from these questions that I'm failing to get the concept here. This function seems a bit buggy, or at least not very user friendly, or else I'm at the very bottom of the learning curve(most likely).