I wanted to post the solution for this in case anyone experienced the same issue. Originally the file was captured and converted to avi using an xvid codec. (Bad idea)
The problem manifested itself with the video being completely out of sync and stretched.
Using magic video converter I then converted the file to MPEG-2. I’m not sure what happened but the sound became un-usable. In order to correct this I imported the original avi file, and separated the audio (deleted the video) and deleted the audio channel from the converted file. I lined up the files to match and it worked perfectly.