What type of camcorder is your video coming from and how did you get it into your computer?
When you started your Premiere Elements project, which settings did you select?
Does the video resize in your Monitor as soon as you add the effect, after you render your timeline or do you not see this effect until you output it?
I don't know the details of the camcoder. I received the file as VOB encoded MPEG2 720x576.
The frame size reduction happens with no effects applied. The first screenshot corresponds to the original VOB playback the second one is the same file saved in Premiere Elements 9 as AVI DV PAL Standard.
Looking forward to your answer.
Most likely the issue is the result of the program having to conform the DVD/VOB file.
There are a couple of things you can do, in order of preference:
1) Ideally, get the original video rather than a DVD and do your editing with it;
2) Use a program like MPEG Streamclip to convert the video to a DV-AVI before you put it into your Premiere Elements project, as described in the FAQs to the right of this forum http://forums.adobe.com/thread/415317?tstart=0 ; or
3) Make sure your Premiere Elements project is using the settings for a Hard Disk/Flash Drive Camcorder (720x480) and add the entire MPEG/VOB to your timeline. Without adding effects, go to Share/Computer/AVI using the DV preset to output a DV-AVI of the file. Then open a new project, set up for DV video, and do your editing using the DV-AVI as your source. You can then add any effects you want to it and it should not cause you this problem.