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Do you have two computer monitors? Premiere Elements always has been kind of fussy about which monitor you use it on. (It's best to use it only on the number 1 monitor.)
So it's a little buggy on where you can place it -- but I've never seen anything like this. Are you saying you can't make it smaller than your full desktop?
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I run a single 5120x1440 monitor.
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I don't know. But I've never tried to run the program on such a large monitor either.
Maybe someone else has an idea.