Hi,
you certainly know that you use a theme with your BP install. And as any theme user, you know that you can add your own styles to it with help of a child-theme.
Why do you have a weird output ?
Because activity content is partially sanitized, and perhaps also, because your theme add some custom styles to blog posts. Do know that, you could test the output of SWA with one of twenty’s theme.
And in any case, you have to style the output via your child-theme style.css file.
About image size.
You’re talking about a “normal rt media” image… Hum, rtmedia is a third party plugin, and not exactly what WordPress use as first to show pictures, or is what impact BP when you display a post excerpt on the SWA.
You have at least to test WordPress attachments output, then BP, then your theme and eventually any other plugin using images… To do that, you have to adjust correctly your image settings (in WP, BP, theme & plugins…).
To resume:
– issue can be solved by using CSS
– and before using CSS, ensure settings are correctly working on a basic install of WP+BP and a twenty theme. Once all this is ok, you can use your theme and adjust CSS.