At a cut point, the two files must be different video scenes. In this case, it appears that you have added a split where there is already a cut in the video.
To dissolve between those scenes, shorten the FROM clip by a few seconds by dragging its right handle to the left. There always must be enough video on the FROM side to cover the transition length.
Separate still image clips can be lengthened (or shortened) on the timeline simply by dragging their handles.