When flagging questions about how to do something that shouldn't be condoned, such as watermark or copyright removal, what is the appropriate flag? I didn't see anything that alluded to these sort of questions in the flag descriptions.
There is no correct or official way to flag. We are not legal experts, and it's not always possible for us to judge whether what the poster is asking is illegal and/or immoral in his/her particular setup, location, culture, etc.
That said, some things are just blatant (watermark removal being one). If I were to stumble upon such a question, my course of action would be to flag it for closure > other and then state that this question appears to be about illegal or questionable practices (urging the poster to adapt the question or remove it). This message will always be posted as a comment under the question and the poster will be notified.
If you think time is of the essence (which will very very rarely be the case), flag for mod attention and/or bring it up in chat.