It looks as though you need to scale your timeline asset to match the sequence format.
As Alan points out, it appears that you have a mis-match.
What are the specs. of your Source Footage?
What are the specs.of your Sequence?
It looks as though you've chosen the wrong sequence preset.
Ctrl-click on any clip in your Project panel and choose > New Sequence from Clip.
That will set up the proper sequence settings for you.
Sweet! I finally got it to match up, thanks for all the help guys, I appreciate it!!
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For future reference...
Please NOTE that the PPro CS6 screen may look a bit different
For CS5 and later, the easy way to insure that your video and your project match
See 2nd post for picture of NEW ITEM process http://forums.adobe.com/thread/872666