You could add a button next to the WaterMarkTexBox and through a command to set its CurrentText
property to null in order to clear it. If you want it to show on mouse hover you will need to edit the template of the control and add the according VisualStates. You could edit the template and the style of RadWaterMarkTextBox very easy in Blend Expression. Just drop a control on the design surface, right-click it and choose from the menu Edit Template->Edit a Copy
. Then Blend will generate all the needed resources and you could apply the required changes.
Hope this helps.
the Telerik team