Ok i’ve seen the info for the watermark on versions 2 and 3 with the box over.

I seem to be having this same problem with version 4. Everytime i place a png file that’s transparent in the watermark option it just puts a white box over my image. i’ve tried gif and it does the same thing. Is there a certain file type or something that we need to use to get the transparency to work with the cart the way it’s made originally?

It's working ok for me (most of the time). I'm creating mine as True Color + Alpha with Transparent option checked png's using Xara Designer.

I have noticed that every now and then it seem to invert the transparency when using the FancyBox (or similar) views. Not sure if that's an issue with those libraries or the watermark addon though.