By default, the "crop" outline starts out in the same shape as the media you are applying it to -- not the shape of the project. You are using pan crop to place video from a 4:3 format video camera into a 16:9 widescreen project. If you look at your pan/crop window, you can see that the "missing" part of the pedal is indeed outside the crop outline -- the pan/crop window chopped it off.

The way Vegas processes event pan/crop is as follows:

1. Take the source image, and crop it with the indicated "F" outline. (Pretend you actually cropped the frame that way with a photo editing program, and saved it as a PNG or JPG, for example.)

2. Take the cropped image and place it in the center of the output canvas (or whatever you might call it) so that it is sized to just fit into the canvas without cutting anything off -- leaving empty space on sides or top&bottom if necessary.

So your "F" cropping frame is a 4:3 shape, just like the source camera. Your crop window is cutting off the pedal. Vegas takes that cropped image and fills the canvas with it such that either width or height just fits. In your case, the height will fill the frame (though most of the cropped image is transparent) and the extra areas left and right are left empty.

But... the solution is very simple. In your pan/crop window, select your very first keyframe, right-click inside the crop frame, and select "Match Output Aspect". This means "give me a crop frame that is the same shape as my project". Since Vegas will always center your cropped image on the canvas and size it to fill the canvas in at least one dimension, if your crop frame is the same shape as your project, then however you place your image within the crop window will exactly match how it is placed in the canvas/output screen.
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Added: Yes, by the way, Track Motion would be another good way to place your image. But many of us find Event Pan Crop to be easier since it only affects that event itself.

If you wanted to change your "inset" video to a different shape than its original 4:3 format, you would have to use both. You can actually make the crop frame any rectangular shape you want. If you wanted the inset image to be a square, or even a tall rectangle, then look at the column of icons at the left edge of the pan/crop window. The third icon from the botton controls the aspect ratio of the crop frame. Click it to disable the Lock Aspect Ratio, or simply hold CTRL down while resizing the crop frame and you can make it any rectangular shape you want. Vegas will crop the image to this shape, then center it in the output canvas. In this case your only option to locate the image elsewhere on the screen is to use track motion.

(One other option would be to apply a Cookie Cutter effect to the clip to change its shape, then use pan/crop or track motion to move it on the screen. If using pan crop, the Cookie Cutter effect must be applied before pan/crop.)