Effects on Adjustment Layers turn the canvas huge

Adjustment layers affect everything below them. They drill right through Collapse Transformations and everything else. The effect is limited to the Alpha Chanel of the Adjustment layer, but some effects ignore layer boundaries. 

Adjustment layers are handy for things like overall color correction, adding grain, or similar effects. It is almost always a bad idea to add Distortion effects to Adjustment layers. You are almost always better off to Pre-compose the layers, then add any distortion, motion tiling, or other similar effects to the nested comp (the Pre-comp).

I'm with Mylenium on cropped screenshots. Please embed a screenshot of the whole UI with the modified properties of the problem layers showing. Press 'uu', copy the screenshot image file and paste to the reply form, drag it in there, or use the Toolbar to embed it, so we don't have to download it to see it.

Cropped screenshots of just the error message don't tell us anything. You need to provide images of the comp and timeline for anyone to be able to understand your issue.

Mylenium

There is no requirement for any such effect because it already works this way. Effects are tied to the layer bounds even when applied to adjustment layers. In particular distortion effects would work this way, anyway, since the boundaries define the pinning of the distortion. Whatever issues you have therefore are either a result of circumstance like combining specific effects and features or simply more general issues like bugs or simply genuinely running out of memory. Since you haven't offered any system information, specific details about your project or screenshots, we cannot say more than that. Again, this is not a fundamental flaw in how AE is designed to work, it's something else.

Mylenium