This has been going on for several months and hasn't been resolved with today's release of version 38. Whenever an image is uploaded for use in composition mode, the picture is oversized and so large, it can't be seen. Reducing the image with an outside editor doesn't make any difference. Uploading from within the project or from hard drive results in the same. I had done this for several years with no problem and it had always worked fine up until a few months ago.
The background image in Composition mode is scaled to fit the horizontal monitor size(usually being the wider one). If you create an image with your monitor proportions, you should have no problems. If I am missing something, please upload a project and screenshots to reproduce the problem.