Inserted image doesn't show on video

Using iMovie 11, I've been trying to insert/overlay still images (jpg) on a video project (mov). The images show up as thumb nails in the project field, but in the video viewing field, they are either blacked out when inserted, or invisible when overlayed (applying "picture in picture").

Have tried reinstalling iMovie, but to no result. The computor is iMac from late 2012, OSX upgraded to El Capitan 10.11.1.

Please help.