I didn’t get a reply so changed my wordpress theme, which has solved the problem.
I don’t know if this is related, but the new post screen went weird as i started using the fourteenpress template. The writing and images are all squashed to the left hand side. This hasn’t happened on previous templates.
Here is a screenshot: http://www.carono.com.au/images/4weird.jpg
I just tried activating the parent theme (twentyfourteen) and then activating fourteenpress again.
Still the same problem, although a few images seem to have now gone full size (e.g. the images given in screenshot 2 in my first post.
Still have posts showing very reduced images
http://www.carono.com.au/images/3smallsize.jpg