Include <ctype.h>

The isspace(3) predicate was being used without including <ctype.h>.
Remove unused `i' local variable
Return EXIT_SUCCESS at end of main()
Add debug.h to watermark_SOURCES

This causes the `dist' target to include it in the release tarball.
Alternatively we could add the header to noinst_HEADERS, but the
Automake recommends adding it to the _SOURCES variable when the header
is only used by one program or library:

  http://www.gnu.org/software/automake/manual/html_node/Headers.html