Yep; use Scale and Position (under the fixed Motion effect intrinsic to each clip) to shrink the clips and place them where you want in the program monitor.
What the client is asking for is PiP (Picture in Picture), and Colin has outlined the method for creating the PiP.
I also find it easiest, when doing a lot of PiP work, to use alignment grids, to help me with both the Scaling and the Position. This ARTICLE goes into a bit more detail. For PiP, I will usually create a custom alignment grid, similar to this:
Good luck, and hope that this helps,