Ok. The answer is even worse. I'm so sorry to have wasted your time, but maybe someone can learn from my really dumb mistake! I found the pic that I used to measure my watermark. The image size is the same as the action (960 pixels), but I made an error when I measured. Instead of using the bounding box numbers I quickly jotted down the xy location numbers from the info panel. Because I don't have a lot of experience (and I was simply following steps rather than using ANY critical thinking skills), I didn't question that my watermark was 613x696, when in reality it is 322x119. Thank you again for your time. I will go back and input the correct numbers in the canvas size step!