Hi,
I'm not clear exactly what you are saying. In your screen shot, I see a preview image display in 16:9 aspect ratio, and an active crop button in the tool bar at the top right of your screen. Are you saying that when you select a clip in the timeline and click on the crop button, that the crop button disappears? Clicking on it should cause controls to appear that give you the options to crop to "Fit", "Crop to Fill" and Ken Burns. The crop to Fit would be the option to use. However, there will be black bars to make the image fit the 16:9 screen. So, what exactly happens when you click on the crop button? What aspect ratio are you trying to crop to?
Another way to crop that gives you an unlimited option to crop to any dimensions, is to select the clip in the media browser instead of the timeline. That will cause a little "Crop" item to appear at the top left of the preview screen.
When you click on the "Crop" item, it will cause adjustment rectangles to appear on the preview screen. You can drag the adjustment handles in any direction to outline the crop that you want to make.
Then click on the blue reset button in the upper right of the screen to make the crop that you have outlined.
If you are having problems working the crop button in the upper tool bar, try deleting preferences and see if that cures it. To delete preferences open iMovie while holding down the Option and Command keys and select to delete preferences in the box that appears. iMovie will open in a new empty library. Reopen your old library to get back to your projects. Possibly you may need to reboot to set the changes. Deleting preferences is a safe procedure that will not cause data loss or disruption to your project.
You can also try creating a new project and see if that cures it.
-- Rich