In Word 2010 (and I think Word 2007), there are at least two ways to get a watermark. In the “Page Layout” tab on the ribbon, in the “Page Background” section, you can choose a built-in, plug-in or custom (text or image) watermark with the “Watermark” tool, and there is a “Remove Watermark” entry in its menu. This kind of watermark appears in the normal view (“Print Layout”).
If that's not it, there's another type of watermark. It's set through the “Page Color” button next to “Watermark”; click “Fill Effects” to see the settings. A watermark can be added as a background gradient, pattern, texture or picture. Pictures don't always show in the normal view, only when printing (I don't know when they do or do not, but I never saw that picture after opening the file, only after fiddling with the fill effects settings). You can remove this by selecting “No Color” in the “Page Color” menu.
In the Word document (
.docx, which is a zip file), the background stuff is set by a
<w:background> node in the file
word/document.xml, right after the namespace declaration. For example (newlines added by me):
<v:background id="_x0000_s1025" o:bwmode="white" o:targetscreensize="1024,768">
<v:fill r:id="rId77" o:title="draft" type="frame"/>
rId77 is a reference to the background image; the corresponding file name is listed in
<Relationship Id="rId77" Type="http://schemas.openxmlformats.org/officeDocument/2006/relationships/image" Target="media/image1.png"/>