That method will have the still appear on top of your original video, perhaps filling the frame completely or only partially if of a different aspect ratio eg 35mm format shot over a 16:9 widescreen video. Use the size/position effect if you want to have a smaller still over your video.
You can also fade it in by dragging the top left corner tab icon of the object on the timeline -- to fade out adjust the tab in the top right.
There are more options if you first un-group the audio from the video using the broken chain icon. Then you can cut out a section of the video, replace it with your still and have acces to all sorts of transition effects between them.
The following is another possible method for addressing this matter. It's how I have been inserting still images from slide presentations. I have been taking video of people giving speeches that incorporate a slide presentation and need to insert the slide image, apply a transition and still stay in sync with the audio.
To insert slides from a presentation into a video project, first export the slides as graphic files. In Magix, from the tool bar at the top of the timeline viewer, select the "Insert Object" tool and choose "Overwrite." Drag the desired object from the media pool into the timeline. This will cause the inserted graphic object to overwrite the material on the given track without moving any objects on any of the tracks. Before inserting, select File / Settings / Program / Video-Audio. Under Standard Picture Length, set the length of time that you want the inserted object to be. Once the object is inserted, to create a fade between the object and the preceding and following video, grab the leading edge of the object and drag it one second (or desired amount for transition) forward to overlap the preceding video, then drag the trailing end of the object down the timeline to overlap the video on the trailing end. Click on the object to highlight it, then click on the “AB” icon within that segment of video to bring up the list of fades. Select the desired fade and it will be applied.
I realize I'm 7 months late coming to this conversation, but maybe it will help someone who is searching the forum looking for an answer.