Shrinking Images in Keynote

I would suggest resetting Keynote, by completing all of the following steps, in the order listed:

1. close all applications
2. uninstall Keynote; for this procedure to work, an application removal tool must be used, this ensures all of the Keynote application files are removed. Keynote presentation files are not deleted. App Delete has a free trial and works for this procedure. It can be downloaded from the developer’s website here:  App Delete
3. empty the Trash (Finder > Empty Trash)
4. restart the Mac (Apple Menu > Restart);  Immediately after the Apple startup sound, press the shift key on the keyboard, release shift when the Apple icon appears. Start up will take longer than usual as the Mac is performing a software repair of the start up drive
5. After the Mac is fully powered up, restart the Mac normally:   Apple Menu > Restart
6. reinstall Keynote from the Mac App Store Application
7. Restart the Mac again

Click on the the image on the slide to select,

then either click and drag a corner handle or type in the size in: Inspector ~ Format ~ Arrange ~ Size

The image can be reduced to 1 pixel by 1 pixel

OK that's a different situation. Image Gallery is a type of place holder, they define all the attributes for that placeholder, eg: size, cropping, rotation, they can't be changed by the user.

If you want to have complete control of your images, drag and drop them direct on to the slide from a Finder window.

That is not normal working:

• what Mac OS and Keynote version is this?
• what exact model of Mac are you using?