I suspect that Ockham has nailed the problem I am having. I haven't tried editing the cr2 yet (I couldn't remember which background I used to try it and hadn't loaded the pz file yet).

I know about changing the map size and zooming the cameras and all that. I have spent HOURS changing map sizes, zooming, adding/deleting etc and 9 times out of 10 I end up remembering that maybe I didn't drop something to floor and then the shadows work so this time when I actually thought of it before I'd wasted a ton of time and got the background moving up instead of down I was equally frustrated :(

I attached a screen shot of the problem I am having. Krystal is dropped to floor, as is the background.

I should also mention that I rendered before putting in the background and I had shadows (not on the ground since there was no ground plane, but did have them from her arm on her dress etc) so I know at least some shadows are working.