Clips inserted in timeline are being cropped and I can't change it

Dropping clips from library into new Project timeline and every clip is being cropped (zoomed) in from the original. At the same time, a small box is appearing on the right side of the viewer...a red shaded area inside a larger box, apparently indicating the portion of the clip image being shown instead of the full frame. I have tried everything I can with Crop and Transform commands and reset to get the chosen clips to show full frame in playback but nothing works. Inspector shows 100% for Crop and Transform, but the small indicator window says it is cropped in.

I've included a screen capture of the right side of the viewer window showing the indicator box. The answer to this is probably blindingly obvious, but I haven't figure out how to correct it: