It is meant to appear on larger images only:
- Large images (which appear on the Large Page and Slideshow Page)
- Medium images (which appear on the QuickView Page)
- Original size images (if the option to incorporate those images into the gallery is checked, and which appear when the "Original" link is clicked)
Watermarks are not meant to apepar on images tht are too small to need to be protected by watermarking:
- Thumbnail images
- Small images (which appear on Details Page and on hte Info Page)
Are you seeing a behavior differern than this?