Sorry, you were confused. I hope Xara reads this as it is dog's dinner that I have reported on more than once.

To summarise, the problem is around the function of the inner controls of a picture:
  1. You now have the Select Tool (standard black square) and the Photo Tool (blue-coloured circle) control points.
    1. Double-click a Photo to switch to the Photo Tool.
    2. Key press Alt+S to switch back to the Select Tool; this is a toggle mode.

  2. Hidden, yes, hidden, under a right-click is a context menu with two tick options:
    1. Aspect ratio lock - totally nugatory action: left-click icon is now equivalent to right-icon and select this menu option.
    2. Smart transform

  3. You finally have meta-keys:
    1. None
    2. Shift
    3. Ctrl
    4. Alt


Throw in an accidental click of a picture with the Text Tool active and you spiral further down.

To place all the above in context.
A shape can be stretched or squashed regardless of the state of the hidden options.
Text can be stretched or squashed with the Lock Aspect Ratio off.

trust your instincts and leave Smart Transform off at all times.
Use the Select Tool for Squishing & Squashing.
Use the Picture Tool for anything else.
Skewing needs a bit more though and the Meta-keys here are sensible.

Acorn