Watermarking with a ttf file:
Please go to your webhosting filemanager, and upload a ttf font file into administrator/components/com_igallery/fonts/font.ttf
You can use any ttf file, see websites like www.dafont.com for free ttf files.
Then insert the text you want to write with into the profile settings -- general tab.
Watermarking with an image:
For watermarking with an image, please upload a PNG file. You can upload a PNG that has transparancy in it.