Where there's a will, there's a way - even if you put watermarks on there, sometimes they'll remove it in Photoshop (unless you do the nightmare ALL ACROSS THE IMAGE watermark - in which case it makes it almost unviewable). Even if it's a crappy job, they'll pass it off as their own.

Even in the commercial publishing world - I recently bought a copy of a horror movie called "Beyond the Wall of Sleep" and recognized the image on the back - most of it anyway. It was obviously doctored... I realized it was Rochr's "Asylum" image (yes, I contacted him, NO he never gave anyone permission to use it).

I'm sure the publisher never asked where the graphic designer got the image for the back cover - they don't think about those things - it's up to the illustrator/graphic artist/designer to have gone through legal channels - and many of them just go through the internet on a search for images they can use - "hey's here's another cool one for free!"