if you are using PP, place the wrapper.php and the watermarked.png in the addons directory. then place your .htaccess file into the images folder of PP.
the .htaccess file should look like this
AddHandler watermarked .jpg
AddHandler watermarked .jpeg
Action watermarked /addons/wrapper.php
anytime an image is called from the image directory, it will be wrapped with the watermarked.png
hope this helps.