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Editing Contents, Stretch Problem


moonlit

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I am trying to edit the contents of a template (right click on layer, edit contents). When I save the file (a psb) it stretches the image. Is this because I have CS3 and not CS4? Is there a preference I need to change?
 
I think I figured out the problem, it need to be converted to a smart object first. Seems to be working now...
 

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