None of the above.
I presented all my info (printscreens and files) to New Magic who were able to replicate the issue. It seems that there is a bit of a glitch in Vegas. They heard back fron Sony in the US and it looks like Vegas 8 does not fully support the MPEG2 files that are recorded by these HDD Handycams. They are however compatible with Movie Studio Platinum 8. Go figure?!
Until I get a patch/update, I’m editing in a trial copy of Movie Studio. I have 24 days left (LOL).
Cheers