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When an image (being used as an overlay) is cropped within VS, the cropped unwanted portion is merely filled with a colour. How come the image size does not reduce but merely becomes partly visible and party invisible? After that i need to make the fill color tranparent in order to allow the cropped image to bkend into the video layer below. Sounds liek too much for an issue like cropping an image

Am i missing a trick here?

If you're using the Crop Filter, open the Customize dialog window. Then at the bottom and to the right of the Width and Height adjustments is a check-box Fill Color, and to its right is a small color (black by default) box. Unchecking the Fill Color option box, will remove whatever color is being used to fill the area outside the cropped size. This will however zoom-in or enlarge your image to the cropped size. So you will need to ensure you are using a higher-resolution image to limit any pixelation or blurring.

There is no way to apply transparency to just the Fill Color. What is happening when you use the Crop Filter, VS is applying a Mask over the image, and only allowing the desired size to be seen.

I would recommend using an image editing program (PhotoImpact, Paintshop Pro, PhotoPaint) or any of your choosing to edit your photos. You will have more options like applying transparency to aid with blending into a background...