Edward, is the Cineform codec better than .mov?

Honestly at this point I'm desperate, I just need it to work. If in any way the cineform codec is better, than cineform it is!

I wonder if Neo renders in cineform codec by default?

I will keep you guys posted.

If you have NEO HDV, which, from what you've written seems so, then a Cineform render in an AVI wrapper is the sweet spot of excellent quality and reasonable timeline/preview performance.

QT is just a container (like AVI). It's the codec in the container we care about, however, QT's performance on the timeline provides less preview framerate. NEO may allow you to make a Cineform QT, but, you'll get better performance from a Cineform AVI.

Victory!
 

Just to update you guys. It turns out the culprit was in fact AVCHD.
Last week I downloaded the Cineform Neo trial and converted the files to CineForm Intermediate with the .AVI wrapper.
Immediate difference! Unfortunately my grown up job kept me away from editing until tonight.
Guys, I'm so happy I could cry. Not one skip or jump. Perfect editing(by Vegas, not me lol), it's like night and day.
Now the question I have is, Neo or NeoHd?? Is there that much of a difference?
Your thoughts please.

And thank you all for your help, it would have taken me so much longer to figure that out on my own.

Peace and God bless!