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

You might want to install the nightly build, then.

aka. 'Fixed in cvs' Will check

Okay, Nightly build fixed the issue. Thanks.