I just tried the macro with Confluence 5.0 and it works just like it does under 4.x, both for the Documentation theme and the default theme.
In my simple test I uploaded an image file as an attachment to the page where I want the watermark to appear, then just used the image file name and extension in the parameter for the user macro.
If you're doing the same, then it would help to inspect what's going on with the aid of some browser development tools, e.g. Firebug.
Which theme are you using when you try out the macro?
Charles, I know this macro was written some years ago, but we are setting up an enterprise intranet using confluence and we have installed your watermark macros with Confluence 6.8.1 to provide the ability for users to create pages with a watermark or background image.
We have just had the solution pen tested and the report advises that there is a potential vulnerbility with your macro:
http://')} </script><script>alert("ptp xss")</script>
Is there anyway you could possibly update your macro to remove this vulnerability?
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