Layer Effect Going Blurry?

Hi everybody, I’m having some weird problems with layer effects. If I cut out a circle, put a layer effect on it and thten flatten it down into the corner of a square layer, then apply an effect with a stroke to the square layer, the bottom edge goes blurry. If I don’t flatten down the circle into the square layer, the effect works as usual. As you can see with the yellow stroke. I haven’t tried this without putting the effect on the circle layer before merging the layers. I don’t see why that should make any difference! I just can’t work out what’s going on here! It’s only doing it at the bottom as well! I would be grateful for any help. Thanks.