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How come when I put something on the time line. It's much larger then in the preview window.
It is likely that your sequence is set to a smaller frame size than your source file, and you don't have automatic Set to Frame Size checked on in Preferences.
Click anywhere in the timeline to make it active, then go to the menu Sequence > Sequence Settings and post a screen shot of the pane that opens.
Please also describe the properties of the files you are using as source material.
or just select the clip in the timeline, control click on it and "scale to frame size." but probably a good idea to follow MtD's instructions which might help you understand what the problem is...