Maybe a little late, but I just had the same problem today. I first selected all images, then in bulk actions > “reset”. Then select all images again and set watermark in bulk actions. This worked for me.
I found out after 2 days of searching 🙂
As mentioned on your site, I’ve put the linked php in another folder under my theme. This php used a filter, which blocked the use of a dropdown.
So I marked this as resolved.
