Hi All:
I originally posted this question and then found the answer in the Sony Vegas Forums. The answer ID is 4393. You can search for it there if you want, but I will also post it here (I have tried this and it works).
Tool Tip: Dealing with wavy lines on straight edges when using still photos in your video project
Most digital camera images are outside the normal 16-235 range of DV (i.e. they are 0-255). To correct this, click the Event FX icon on the image (or right click on the picture and choose Video Event FX) and add both the Sony Color Corrector and Gaussian Blur.
IN the Video Event FX window click the Preset pull-down menu and choose “Computer RGB to Studio RGB.” This brings the 0-255 range down to 16-235 and helps with a lot of high contrast images.
Next, in the Gaussian Blur, set the Horizontal range to 0.000 and the Vertical range to 0.001.
*Note: The Color Corrector effect is only available with Sony Vegas Movie Studio Platinum or Vegas Pro packages.
In addition to using these video effects, you can also try using the Reduce Interlace Flicker switch. To do this, right-click on the picture or event, then go to switches > reduce interlace flicker.
I have tried this tool tip and it helped a lot (one thing I would do is create my own preset using these exact settings so that you can just apply it whenever you need it without having to follow all of the steps). I do hope, though, that Vegas will work a fix for this problem into Sony Vegas 10, so that we won’t have to work around the problem this way.
Sarah
https://www.4gospeltruth.org