[Carlo Di donna]

Sry to hear this problem, I run Sony Vegas Pro 8.0 C, I have this issue now and then whenever I use “yourecorder” which saves video files in its own file format, and then converts it to AVI (but in such a way that Sony Vegas cannot decode it properly)

I know you use some other program to transcode, but I know of another program that will save you time, effort, and file size. get Blaze Media Pro, its an all in one program, but among its many features, it has one called “edit video”

if you open the video, and save it, it will recode the avi file into something Vegas can easily decode.

as far as the red box error in video timeline, closing sony vegas and reopening it fixes this issue for me

hope this helps