Mark,
This is rather timely because I just had the same problem.
I use Final Cut Pro for all my video editing and, until I upgraded to FCP5, I could create MPEG-4 files and Vegas would recognize them.
Now, with FCP5 things have changed quite a bit with the options when creating MPEG-4 files. One of the big differences is the extension is now .mp4 instead of .mov.
I’ve been scratching my head too and then I read the post. I never thought to try dragging in from Exporer. And, at first, it appears that it won’t drag. But I tried a few times and, lo and behold, it worked. It’s really strange that it doesn’t appear at all in Vegas’s Explorer browser.
Why don’t you be persistent and it may work for you too.
Gordon