Try checking out the "Cookie Cutter" effect under the "Video FX" tab, specifically the "Picture-In-Picture" preset. You'll more than likely have to reposition your video (or reposition the cutout).
There's a "border" option to the right; change color on the left.
HTH,
Iacobus
-------
RodelWorks - Original Music for the Unafraid
Buy Instant ACID by JohnnyRoy and mD!
mD at ACIDplanet