Bill, there's all kinds of opinions on this, but here's my take on what can possibly cause perceived bitter smoke flavor from the wsm, specifically:
too much wood
too much nutwood (fruitwood is milder)
too much bark
unseasoned wood (nutwood in particular)
walnut or other undesireable woods
door cracked enough to let wood flame
Other than that, three more suggestions come to mind. For one, make sure you don't put the meat on before your charcoal settles down and quits billowing smoke, Kingsford blue bag especially. Lighting the top with a torch seems to really help as the charcoal never starts burning nasty like it does in a chimney. Also, getting back to the wood, I like how it smolders better when buried in the coals rather than on top. The only other thing I can think of is that it's harder to oversmoke when you're using water in the pan. Ray Lampe, aka. Dr. BBQ, has said something about this, maybe in his interview here?
I doubt you're doing anything "wrong". It's mainly just personal preference with the wsm and you could always just try sprinkling some wood chips in between the layers of charcoal.
Dave