Ok, I fixed it. LOL I did a bit more digging around. In the Appearance > Widgets, I went to the widget, changed the “size of thumbnail” ratio and checked the box next to “Use aspect ratios of original images?”. It is working great now. 🙂
I’m having this same issue. It just suddenly started doing this with my last two posts and the images I am using are the same size as all my previous posts.
I tracked it down to a caching plugin I was using. It was causing all kinds of errors.
Thanks for your help.