I size most of my images to 560 pixels wide, so they'll fit in the main column without going beyond the edge. I also use css selectors to give a five or ten pixel padding to images within the content area, to keep the text away. I prefer to host the images with the blog, because wordpress can create a page for them with almost no extra work on my part.
What image editing software do you have? I can give you step by step instructions in Photoshop, or more general ones for The Gimp or something else. Paint.net will work, and is free / open source. You might be able to get something simpler that only does watermarks ... but any of these will give you more control over how the watermark looks, and where it goes within the image.
Use the text tool, or if the software has one, the text selection tool. Hold down the alt key and type 0169 on the numeric keypad to get the © symbol, then a space and your name. Make a new layer from the selection, or from the text if one isn't made for you. Play with the layer blending options to get a style you like.
Try turning down the opacity a little bit on the watermark layer. I've found it's harder to remove one of my watermarks if it's a little bit transparent than if you can't see the background behind it.
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