RESOLVED via PM
What version of Videopad is being used?
Share your watermark file and someone will check it out. Upload the file/s to a free server, such as Google Drive or MS OneDrive, get a shared (public) link, copy the link and paste it here or to me in a Private Message via the mail envelope in the top-right corner of this forum. When using Google Drive, if necessary change "restricted" to "anyone with link can view."
It would be helpful if you also upload a screenshot of your pixelated result.