There are a couple of ways to handle that portrait footage, and your desired result will probably dictate which you choose.
- You can use the full portrait Frame, and leave black bars on either side.
- You can create a "background" to "hide" those black bars. One see this treatment on many news channels, where their Source Footage is say 4:3, but the network is broadcasting in HD with 16:9. They might use an abstract background, say a heavily Blurred version of that footage, Scaled up to fill the full Frame Size of the broadcast, and probably Screen it back, and lower the Contrast. There is no end to how an abstract background is created, or treated. See this article for more ideas: http://forums.adobe.com/message/2471303#2471303 That article was written for a Still Image SlideShow, but applies to Video Source Footage too.
- One can use the Fixed Effect>Motion>Scale to Scale the portrait footage to fill the width, BUT then the Project's Frame Size will effectively Crop that portrait footage, and initially by effectively Cropping the top & bottom of the Source Footage's Frame. One can then use the Fixed Effect>Motion>Position, to adjust that effective Cropping, to say cut off just the top, or just the bottom, or adjust the amount of both top and bottom (more from one, than the other).
I suspect that the issue is that the overview window is showing the *sequence* settings while the preview window is showing the clip settings (which is "side-ways").
I just did a test with a vertical clip. When I dragged it into an exisiting sequence I got the same result you did. Premiere did *not* ask if I wanted to confrom the sequence to the clip. It did not actually "scale" the clip but it did show the same thing you have where only part of the clip is visible.
When I dragged the clip to the "make new sequence from clip" icon. I got a properly sized sequence and preview window.
Of course that's not going to help you much if you're combining portrait and landscape footage.
I would start by dropping a piece of landscape video in a sequene and conform the sequence so you know it's right for that footage. Then drop a portrait shot in (doesn't matter which one) and go to "Effects Controls" amd Motion. Scale the clip down so it fits the window and make a note of the percentage. Now you've got the formula for all future portrait clips.
To get the bounding box change the "Fit" option to a percentage in the overview window.
Hope this helps
Thanks for the in-depth answer! For this project I can live with the black bars on the side, can you explain to me how to use the full portrait Frame?
Thanks so much for the insight! I appreciate it greatly!