The watermark is a floating object. When you put a table in your
Header, the watermark gets "anchored" into the first table cell and
starts trying to position itself inside that cell.
1. Delete the table from your header. This should also make the Watermark go away.
2. In the Header, press Enter to create a blank line. Then, add your
table to the Header.
3. Close the Header and insert your Watermark. The watermark should
now appear in the right place.
If having the blank line is an issue, you can set the font size for
that line to something tiny, like 2, and it will occupy almost no
I searched the web for specific information on this problem, but did
not turn up anything. I did find some information about how Word 2000+
positions floating objects (like watermarks) differently from earlier
versions, which gave me enough of a clue to replicate the problem on
my copy of Word and find a solution.