It looks very much as though the aspect ratio of the image is less than aspect ratio of your project (e.g. the still's aspect ratio is 1:1 whereas the project's aspect ratio is 1:1.78) - this is what happens when using pan/crop when an image is mismatched to the project.

There are a couple of ways to fix this: 1/ Put the image on its own track and use Track Motion to adjust the position; or 2/ use an image editor (I use Corel PaintShop Pro) to add width to the image so that the image's aspect ratio matches the project's aspect ratio.

Use Track Motion instead of Pan / Crop. It's a lot easier!

In this situation doesn't in Pan/Crop right clicking on the box and selecting "Match output aspect" avoid the problem? Or maybe I'm misunderstanding what the problem is.

... doesn't in Pan/Crop right clicking on the box and selecting "Match output aspect" avoid the problem?

Yes, it solves the width problem but it creates another problem because the top and bottom of the circle will be clipped. The "Match Output Aspect" zooms in on the image so that the width of the image matches the project, but it also chops the top and bottom as well. If it didn't affect the vertical ('The Outer Limits' being evoked as I wrote that), the circle would become ovate.

it creates another problem because the top and bottom of the circle will be clipped

But doesn't dragging out the crop box to a larger size fix that problem?

This is with VMS17 but I assume Pro is similar

But doesn't dragging out the crop box to a larger size fix that problem?

Ah ha! I now see what you're getting at. You are right. This would work for the OP because the background to the red circle is black or 0% opacity and so the original AR of that image file becomes irrelevant.

Yes, the same in VP.