I have put an image which has small height in a track and added Transform effect to it. The red transform box does not size to the image, but instead to the video project. How do I make it size to the image?
Short answer is, you don’t. The transform acts on a frame defined by the size of the project, not the raw image in its native size.
Right now, if you’re going to do more than a simple, single transform to images that aren’t already that size, you may want to consider resizing them to match, in the way you want, before importing them to the project.
Internally, images like that get automatically resized to match the project at present, and that can cause unexpected results when multiple transforms are stacked. If you search this forum you should find more details on reports about that. Improving support for mixed media is on the roadmap.