Like previously stated GIMP is a good free alternative, but if you have the financial means acquire some version of photoshop- I use CS2- i wouldn't use anything older than CS2
Pretty much just get creative and make it your own, use tons of layers so you can always adjust things,pretty much every different aspect should be its own layer.
heres a few examples of my Watermarks Ive made in photoshop over the years.
I usually tend yo place them in the top right corner, everyone's opinion and eye differs.