I tried different tracks including a picture in picture one and have the same issue. The project is just a default set up project and the image is just a basic jpg
As far as I could see is that you used Pan/Crop at that picture on the PIP track and so that the part there is left to show is only a small stroke of the part of right under, maybe caused by the unintended use of "freeze frame".
See my fist post here: Use Track Motion or the Picture-in-Picture FX (you already placed your grafic into a track with the Picture-in-Picture FX applied).