When uploading photos, whether myself or a normal user. No water mark is applied to them. If I go back and rescan the database and apply watermark it works just fine. Am I missing something here?
In watermarking options you specify the correct server path to the watermark file. Note it must be png if your using GD and usually with Imagemagick it is gif file. You can use png with imagemagick however there are alot of installs where png support is not installed with imagemagick on the server so I always suggest gif when using imagemagick
After you have things set right under edit categories you would specify in the group permissions which usergroups get there pictures overwritten with a watermark