IMovie 11 PIP Clip Transition Problem?

OK I have several clips all having one continuous pip of a water mark .png file.
Before inserting this, my transition between clips ran perfectly, I used swap, love the effect for my customers. Now, since adding my PIP of my png, none of the transition work between clips. 
Anyone have an idea around this, thanks all, love this forum.

what do you recomment for the highest quality, to then import back
What are the specs of the footage you used in your movie?
I would try the two highest quality presets in Share>Media Browser.

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