Codewalkers.com has a new tutorial posted on their site discussing the use of GD to make watermarks/security images/etc in your images.

Often, tutorials covering the GD libraries and it's available functions in PHP will show how to overlay text onto images, manipulate images (resize, flip, rotate, etc) or how to dynamicly generate charts or graphs from numerical data. I have not seen many demonstrating how to combine images (or moreso, placing a transparent forground image over a background image).

In this tutorial, I will demonstrate how to place an image over another image which may come in handy for many uses including, but not limited to: applying a signature or logo to a photo, adding a "watermark", placing an object onto a background or whatever else you might image useful.

They mainly show you how to use the imagecopymerge function to combine the data of the two images...