What if someone re-inks a document after its closed? Yes, an error will occur in the Capture Fields Processor but any tips on how to react to this error?

Do not forget the probability - altough very small ( generally close to 1/10000 but can be bigger) - that the pattern used in the closed document is in use on another open document. In such a case, the Capture Fields Processor won't generate an error and the open document will be (wrongly) processed even though the ink was placed on a pattern that was used on a closed document, because they use the same pattern. I believe Pattern Sequences could be used here to prevent this case from happening, but it would require further analysis.

Ideally, I'd like to print something that says "Document previously closed" as a watermark over the original doc.

The goal is very legit. Pattern ID's retreived from pen data could be the key to retrieve an already closed document, provided that the closed document contains some reference to the pattern ID it used when it was open. But over time, you have to take into account the fact that several documents will end up using the same pattern (not at the same time, of course, but assuming a pattern is unlocked when a document is closed).

For example, say that you save every closed document with a reference to the Pattern ID it used, in order to retrieve if a user writes on a closed document. Now if you write on the pattern of an already-closed document X and then dock your pen, you still won't be able to tell on which document the client wrote on since already-closed documents X, Y and Z all were created using the same pattern ID, at different times of course.

Hope this helps!