We changed some of the fonts used for the 'Captcha' security code last week.
One of those fonts doubles as the 'Watermark' Font also.
It looks like that new Font wasn't making good watermarks.
I just fixed this, so the watermark is working properly again.
I'm sorry, but the only way to fix the block letters in your watermark is to upload the artwork images again.
You can choose 'Edit Artwork', re-upload the image and choose to apply a watermark. This just will replace the existing image. All of the artwork information, reviews and comments, etc. will be preserved.
Thanks in advance,