The most common misunderstanding that people have is that MP4 is a container format and it can contain video and audio with different codecs. There are two reasons why your settings above are unlikely to work for many people.
Vegas offers you h264 = AVC, or h265 = HEVC codecs. The later is very new and not supported on many devices yet. So I suggest for compatibility to use the AVC/AAC presets.
Secondly, the bitrate is a critical setting when it comes to playability on various devices. The option you have set on the screenshot above will work on most newer computers, however, it will struggle with older ones. Since your source material is from DVD, it is not of much value encoding with very high bitrates as you will not notice the difference. For maximum compatibility with all types of older computer hardware, I would recommend CBR of 6 Mbps.
Remember that this recommendation is based on your requirements. The default settings provided by Vegas is usually just fine on most computers with the latest generation of CPUs/graphics cards.
The symptoms you describe are what you would expect if the client computer is unable to keep up with the bitrate of the video file. You usually get an error message if the client is unable to decode using the codec you have specified, however, as I said h265 is relatively new and it may be that the video decoding is pushed into an underpowered CPU and results in long pauses or stuttering.
Ultimately, the quality of encoding can only be judged by yourself, since you know what the original material looks like. I would suggest starting off with the suggested settings above and even consider lowering the bitrate if you cannot see a difference, since it will result in a smaller video file which is even easier to play on older hardware.