Can't watermark gallery images?

I hope someone can help. I’m using gallery2 with Imagemagic and I can’t get the images to watermark at all.

I have the same set up running on a different non DH server and it works perfectly.

I did manage to get it to work using NetPBM, but that reduced the quality of the image itself too, which I can’t have (even at the highest res setting).

Any ideas what’s going on here?