I'm afraid the watershed demo is not designed to work with images that already contain transparency. It's intended for full color images with a background to be removed.
I am using the same code in my app and I have to make it work for images with transparency.
I am not sure that your demo WatershedSelection isn't designed for transparency. It's just the first opened image witch is not working. If I opened the same image a second time it's ok. Any idea why?