Hi Steve, thanks for your reply.
Yes I've tried that but can't seem to get it just right. Either one side fails to feather, or the top (or bottom) fails to feather. Just can't get it to work. I've spent ages on that effect fiddling with the settings. A major problem is that the overlay has been reduced in size by "Pan & Crop" so it sits in one corner of the main event. It's this that seems to prevent Cookie Cutter from working how I want it.
Maybe I'm missing something with Cookie Cutter?
Best regards,
Steve.

Combining the Pan/Crop and Cookie Cutter will give you the results you're seeing.

Try swapping the order so that the Cooke Cutter is applied first and the Pan/Crop is applied after. That should give you the feathered edge and allow you to create a PiP.

There's another solution, which involves compositing video tracks. I show you how to do it in my book, but it's a bit hard to explain in a forum post.

Thanks Steve.
I've tried reversing the order before but got the same results. Tried again just now and got the same results as my earlier attempts. The problem occurs when I reduce the size of the overlay to place it in one corner of the screen. Looks like I need to buy your book!.
Thanks for your help,
Steve.

I'm surprised to hear that swapping the order of your effects isn't resolving your problem, Steve.

Have you tried recreating the effect from scratch -- first apply the rectangular Cookie Cutter with feathering (with rectangle large enough to reveal your entire video) and then use Pan/Crop to position the PiP?

It really should work -- if I'm understanding what you're trying to do anyway. This will create a picture in picture with a feathered edge all around.

Hello again Steve,
Strange thing is, whenever I apply an effect to an event, the Pan/Crop always opens up as well, in other words the "Plug-in Chooser" window appears on top of and simultaneously as the "Pan/Crop" window. I cannot choose an effect without the Pan/Crop window being automatically opened.
Have I got a setting wrong somewhere?
Sorry to keep bothering you with this!
Steve.

No. But you can drag the order around in the Plug In Chain at the top of the FX panel so that your Cookie Cutter and precedes the Pan/Crop -- and you can uncheck each effect so that you can work on one at a time.