I spent all farking night on this, so I thought I'd write it down so that I don't ever have to go through this again. Also, if anyone else out there happens to stumble onto this, all the better. It certainly seems that this is something many want to do, but there's so little info on how to do it, so…
Here's how to create a transparent watermark to apply to photos before uploading them to the internet:
Grab a copy of Adobe Elements 2.0 -it comes free with many scanners, tablets, etc.
Create the watermark as you want it (minus the transparency, we'll get to that)
On the tabs on the top, right side of the Adobe Elements window, click on the one that says “Layers”
If there's a background layer, set it to 0% opacity.
Set the layer with your image/text on it to somewhere between 30% and 50% opacity. -You'll have to experiment to get it the way you want it.
The preview should look checker-y. This shows you that the image is transparent, the background will show through.
To save it, go to the “File” menu
Choose “Save For Web”
A screen will pop up with before and after image samples.
On the menu on the right, Choose “PNG-24” from the “Settings” drop-down box. (“Transparency” should be already be checked.)
The image samples on both sides should be transparent (the checkers should show through the text)
Click the “OK” button to save the image.
A box will pop up asking for a filename and location to save the file.
You're done!
Notes: At first I was trying to figure out how to save my transparent watermark as a gif -then I found out that .gif files can only have one transparent color in them. This means you can't make the entire watermark transparent when saving as a gif -you'd have to live with opague text and a transparent background (or vice-versa, but that's just dumb). But if you want the entire image to be transparent, you must save as a .png file.
