The problem I am having is that every single file I open looks like this. Once I click transform (which I have to) the layer no longer allows me to click and edit the layer. I like to re-size my images in relation to the multiple images I place on a document. My previous version of photoshop did not create a transform box with each new file. Does anyone know how can I adjust photoshop so that it doesn't do this. I am using CS5 on a PC.
You are drag&dropping images as smart objects. Check the relevant options in the prefs and/or drag&drop your images to the application frame, not the document area to keep them separate.