Why dont you consider QGIS/GRASS combination for your watershed analysis? GRASS has specific watershed function that you can access from QGIS. 

Youtube has some demo videos on GRASS/QGIS watershed analysis.

more reading material here;

http://www.ing.unitn.it/~grass/docs/tutorial_62_en/htdocs/esercitazione/dtm/dtm4.html

http://jentjr.blogspot.com/2011/06/watershed-analysis-using-grass-gis.html