Are you sure that you're not dragging the edited timeline back onto a new timeline, rather than original, unedited material?
iPad won't let me edit the original reply. D-oh!
I'm not nesting timelines. I only have 1 timeline. Everything is being dragged from one bin.
This is a bug. This for some reason has to do with Motion>Scale.
Once I put the scale down to 33.3333 instead of 34 (making the new size to be exactly 640x480). That is just this particular video though and I have to check whats going on with some of the others as they have no scaling in the motion tab.