1. You need to prepare the watermark. If it has a solid background color, duplicate the background layer, shut off the visibility of the background layer by clicking on its eye icon. Make the background copy layer active, then use the magic wand tool to select the background, and hit delete on the keyboard. You should have the watermark surrounded by transparency.
2. Open the photo file. Arrange the floating windows so that you can see the picture and the watermark side-by- side.
With the move tool, drag the watermark (from step #1) over to the photo, position it and resize with the corner handles of the bounding box.
If this is not clear or you get stuck, feel free to repost.
I just got the elements 11 for Christmas and it is the first photoshop program I have ever used, and am still trying to learn how to use it. The watermark image I have does have a solid color background, but how do I duplicate the background layer and so on?