Weird Final Cut Express Transition Issue

Hi I was wondering if anyone else has ever had this problem in Final Cut Express 4.01. When I drag a transition to change the duration, it effects my video just slightly. It changes the size a little bit and blurs it too. Also, when I drag a clip to change the duration and make it longer, it does the same thing.

Say the clip is a still picture..when I drag it to make the clip longer, at the point at which I began the drag, it blurs the image just slightly, but definitely noticeably. If I remember correctly, this blur remains when I export the video. It hasn't always done this, just a recent phenomena. I've been trying to work around it by cutting and pasting to add length but this is getting really annoying.

I've noticed that final cut express is strange like this in that sometimes it decides to act certain ways and other times not.

Has anyone ever had this problem? and any possible reasons/solutions?

I'm on a Macbook Pro with Snow Leopard btw.

Thanks!

Update: Looks like when I export as an mp4 and set the aspect ratio, it get's rid of most of the effect, except for a slight color variation that's not worth really fussing over.