When I drag a picture into the timeline it is magnified like 7 times, and can't use it

I was using Adobe 8.0 Premier all year and all this weekend. Everything worked fine. (I never upgraded to 9.0 becasue presets won't carry over and didn't want to recreate all of them)
I decided to do an instant movie. When it started the title page was really magnified. I didnt tlike the order, so I quit the process and restarted PE8.
Upon restarting, every image I drag to the timeline is magnified like 5 to 7 times. If I double click the image form the project tray the image looks good. I just can't drag and drop. I need to edit effect to .13% of value in the motio tab to get the picture to fit.
I uninstalled 8 and reinastalled. I installed the updates. Still nothing. I cant figure out what is happening.
Is there a setting or something.
Thanks Chuck
(One goofy thing I noticed after the Instant Movie goof - all my pictures in the tray have like a little (red circle and green square) icon in the upper right.

Under Edit> Preferences> General uncheck "Default Scale to Frame Size". This will work for future added stills. For those already added right-click the image in the timeline and uncheck "Scale to Frame Size".
Cheers,
Neale
Insanity is hereditary, you get it from your children

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