I'm not a big fan of Watermarks, so I do my best to disable them.
My config is an external directory for the albums, along with:
watermark images: none
Full Image Protection: Protected view+Disable hotlinking ( I like the idea of having a link to a full image being redirected to the surrounding page, showing context rather than only the image)
However, even though I do this, it _watermarks_ the images with the text "Watermark" which is quite annoying.
example:
http://spider.alternating.net/zen/index.php?album=Friends%2FPool&image=img_7391-dick.jpg&p=*full-image 
Zenphoto
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