Premiere CS3 on a Windows 7 32 bit install. Both fresh and aside from my lossless options not showing up in the export tab I thought I was doing ok.
The problem is my footage is 720x480 and so is my project. But when I drop video onto the timeline it shrinks the video down into the title safe area. I don't have any strange options on that I am aware of and I can't figure out why it would be doing this.
I'm having to re-edit my video since you can't change settings on a project that is already started so I don't want to have to redo that effort again if its fucked up from the start.
Why would it be shrinking it? Here is a image exported from the timeline so I know its not just a display error.

Project settings: DV 24P
23.976 frames/second
Frame Size 720 x 480 16:9
D1/DV NTSC Widescreen 16:9(1.2)
No Fields Progressive Scan
24 fps Timecode
Title Safe 20% x 20%
Action safe 10% x 10%
Audio 44100 hz
And my video matches that. So why would it be smaller once I drop it onto the timeline? I've used premiere for years and never had this issue. It's really frustrating. The video shows up fine on the preview window... but once I drop it onto that timeline it shrinks it into the title safe margins. I tried starting another project and eliminating the title safe settings (0%) and it still did it. Besides those have been there and always seemed to be just guides for the grid that pops up not a hard and fast cut off for video.
Any ideas?