I'm trying to figure out how to get Sony Vegas 8 to let me insert images without stretching them to the size of the video I'm editing.

Say for example, that I'm creating a video about 720x480 in size. And I drag and drop an image into the timeline that's about 300x300 pixels; what it does is stretch the image to be 480x480, regardless of what I want. I've tried unchecking the "Stretch to fill frame" option in Event Pan / Crop and that doesn't change a thing. I'm lost here. Google isn't helping, and I don't know what else to do.

Any suggestions?