Are you saying WD is creating those files or are you saying WD is not picking up files with "strange names". Can you show a few of those filenames?

I don't think WD has any influence on the NAME of a file.

It should be easy enough to test: does the corruption happen when you stop the WD task?

One thing you could try....

On the "Other" settings window - http://www.watchdirectory.net/wdhelp/help/wdnewconfigpage6.html - is an option that controls how WD checks if a file is "complete": "wait for files to be available" set that to "do not wait".

On the same page increase the value for "delay starting task" to something high enough so you can be sure a newly created file will be complete. If the files are not too big, I guess something like 10 seconds should be enough.

If you leave "wait for files" to "both methods" or "until it can be opened", that may conflict with the program that is creating the files. This can happen if that program uses a very strange method of writing to the file:
create file
close file (the file is now 0 size)
open file
write a few bytes
close file
open file
write a few bytes
close file
open file
write a few bytes
close file
open file
write a few bytes
close file