yes that is how it is supposed to work.
The small image size is defined in:
Max Width and Max Height
thats for small images.
Make sure both have the same value
to display big image you must have :
Save Original Files -> YES
you also can resize the original (if for example people try to upload images like 10000x10000)
Resize Original Image (leave empty if you dont want to resize)
This will only affect new images.
If you have old images (and you had keep originals to on) you can rebuild normal images and then original images in:
Rebuild Image Sizes
but this will only work if original image is there.