Background Offset shader distorting background horribly

Hey all. Recently I was looking around for Looki's Background Offset shader in order to create a decent "water" effect for my game (I got the idea from nifflas after checking out his post in this thread:Please login to see this link. and checking out The Great Work itself). Well, nivram was nice enough to give me the shader, but there's a problem when I use it.

I want the shader to distort my background clearly, like here:
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however, whenever I apply the effect it ends up like this:
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I thought at first that I was doing something wrong with my actual overlay image, resulting in a bad distortion; but after trying several different variations and even downloading The Great Work's source and using the exact same image and settings, it still won't work correctly.

any help appreciated. perhaps i have a beta version of the shader?

mfa here:
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Anybody? I'm fairly certain it's as simple as me having an outdated shader...

the shader code in case it sets off any flags with anybody:

<effect>
<name>Background Offset</name>
<description>Offsets the background using the object's texture (Red for X, Green for Y).</description>
<author>Looki</author>
<BackgroundTexture>1</BackgroundTexture>
<parameter>
<name>Width</name>
<variable>width</variable>
<type>float</type>
<value>10</value>
<description>Width of the shift in pixels.</description>
</parameter>
<parameter>
<name>Height</name>
<variable>height</variable>
<type>float</type>
<value>10</value>
<description>Height of the shift in pixels.</description>
</parameter>
</effect>

float width,height,fPixelWidth,fPixelHeight;


float4 ps_main(in float2 In : TEXCOORD0) : COLOR0
{
	float4 shift = tex2D(img,In);
	float2 off = float2(width*fPixelWidth,height*fPixelHeight);
	off.x *= 2*(shift.r-0.5);
	off.y *= 2*(shift.g-0.5);
	float4 o = tex2D(bg,In+off);
	o += tex2D(bg,In+off+float2(fPixelWidth*0.5,0));
	o += tex2D(bg,In+off+float2(fPixelWidth*-0.5,0));
	o += tex2D(bg,In+off+float2(0,fPixelHeight*0.5));
	o += tex2D(bg,In+off+float2(0,fPixelHeight*-0.5));
	o /= 5;
	return o;
}


technique tech_main { pass P0 { PixelShader  = compile ps_2_0 ps_main(); }}

some more pictures to further reinforce my problem:

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i should probably try moving this to the shader development forum now that I see them. i'll try posting it there as well.

Vaxx, that's pretty odd. When I do the same nothing changes at all... so there's definitely something wrong somewhere. Thanks for your reply.