Its a combination of original footage ratio, Vegas project settings and render settings. You will see this pillared, letterboxed appearance on TV many time because someone has screwed up or becuase they wanted that look.
You should be able to do a control drag to the left which will speed up the clip a maximum of 400% (15 minbutes) Then add a velocity envelope and drag it all the way to the top which will speed it up another 300%. Voila 5 minutes.
If you decide that using match output aspect isn’t your cup of tea because you could lose some of your picture then use keyframes with the track motion. WEhile the track motion does effect the entire track you can keyframe it back to the original position.
So when you highlight the event on the time line and right click and choose find event in in project media it goes back to an incorrect file in the media project window? Don’t know why it would have happened except that ‘its a computer’. But – is the correct file in the project media list? Can you drop the correct file on the file in question on the time line by right click dragging and choosing ‘add as take’ and get it corrected?
As Mike has said just use the NTSC DVD or PAL DVD template and make the necesssary changes. i.e. constant BR of 10,000 (which is highly questionable) and progressive. That will give them what they asked for, but maybe not what they really weant.
.mpg files are compressed as are HDV (m2t).
.m2t IS an MPEG2 type file.
You render your HDV (m2t) file out depending on what you want to do with it. If you want it rendered out at same quality as you started with (except for edits) you render out as HDV m2t) which is an mpg file. If the intent is a DVD (which by definition is SD) then you render out as mpeg2 DV. There obviously will be some degradation. If you are going HD it depends on whether you are going to BluRay disc. Then use one of the BluRay presets (probably 1440×1080 for HDV). You can also use the Sony AVC or Mainconcept AVC.