This may be normal depending on your usage of the plugin. Magic Bullet looks does not apply an effect to the entire image on the Overlay Video track, if the image is to be used as an overlay the effect is only applied to the foreground.
This may happen in some cases if the Magic Bullet Looks effect is applied to a title. The effect is only applied to the part of the title contained within the alpha matte. The effect will not be applied to anything that is transparent. So if the effect extends past the edge of the matte, the effect will be cropped to that it is contained inside of the alpha matte.