Ok, back from vacation and will try this again.
Stephen, I did as you said with Vegas preferences and John was right, all the “path” folders are located in my internal C drive where I have > 15G free. Although, I have already successfully rendered the MTS video to mpeg in Vegas to my external.
I am getting the error with DVD Architect. When i choose “make a DVD”, I select “prepare and burn“, I select the external drive for storage, once the rendering completes after an hour or so, then I get the error while preparing. Is DVD Arch looking for some mpeg data in the C drive? I have the 7GB mpeg file in external drive, corresponding DVD Architect .dar file with chapters/menus, but keep getting this error when trying to burn or just “prepare to folder.“