Thank you for the responses - all very much appreciated. For reference, I am using a Win 10 system, version 7.25 of VideoPad using an onboard graphics card on a fast system. Performance should be very good in terms of the interface.
The vanishing image inside the container is a quite consistent bug. An inconsistent bug is the container becoming unresponsive to mouse control, which is released by entering changing a value using the sliders. When I snapshot the sequence the smaller image is also missing despite being visible in the sequence.
I suspect that the performance hit when using the WYSIWYG interface is due to the effect changes being tied to the track preview which seems to take a long time to update.
I have tried the Borate's solution and was unable to replicate with my square smaller image. Borate's smaller image seemed to be more rectangular than square. The result I saw was that there was movement in the middle of the screen but the image was clipped left and right as if constrained by an invisible square. Moving the image beyond the bounds of the visible clip preview area had no effect on this.
The only resolution that I have found that is effective is:
Letterbox to aspect ratio (same effect as generating an image with the same AR and importing that)
Motion (far right to far left - properly keyframed)
I take the view that having to messing around with the object's AR before applying the Motion effect is also a bug.
The auto scaling of the smaller image so that the smaller image width = the video width (height is therefore taller than the videos height) is more of a feature than a bug, but since that generates the "Letterbox to aspect ratio being required" issue, I think that this is also a bug.
I have previously tried Nat's Scale / Position but again find that this results in the clipping effect.
Is there a bug reporting route? I don't think that this is wholly down to my lack of familiarity with this product since we are arriving at the similar solutions.