[Breakthru]

Confirmed working on 4.0.7

To get rid of that light gray background edit the plugin, Plugin Manager, Watermark Attachments - Display, attachment_display

You have to change the 100 to 127 like below...

if($wm_t&&imagesx($im_a)>imagesx($wm_t)) {	
				imagefilledrectangle($im_a, 0 , 0 , imagesx($im_a) , imagesy($wm_t) , imagecolorallocatealpha($im_a, 0, 0, 0, 127) );
				imagecopy($im_a, $wm_t, imagesx($im_a)-imagesx($wm_t), 0, 0, 0, imagesx($wm_t), imagesy($wm_t));
			}
			if($wm_b&&imagesx($im_a)>imagesx($wm_b)) {	
				imagefilledrectangle($im_a, 0 , imagesy($im_a)-imagesy($wm_b) , imagesx($im_a) , imagesy($im_a) , imagecolorallocatealpha($im_a, 0, 0, 0, 127) );
				imagecopy($im_a, $wm_b, imagesx($im_a)-imagesx($wm_b),