This is really strange I have been using Vegas for years and never have this problem before.
I just did an update to Vegas 8.0c and everything was working fine, today I opend the same project but can't preview from the project media only from the timeline, I opened my last few projects and they all do the same thing.
you get sound and you see the frame display playing on the preview window but NO picture !!!!!!
Any ideas !!!!!!!!!!!!!!!!!

Sounds like it's the "improved" trimmer feature that's got you confused.
From the 8.0c Release Notes:

When the Show Video Monitor button in the Trimmer window is selected, video that you preview from the Vegas Explorer and Media Manager windows is played back in the Trimmer. Because the Trimmer is placed in the same window dock as the Explorer and Media Manager, you will not see your video preview. To preview Explorer and Media Manager video, you can drag the Trimmer to a new dock group, or you can turn off the Show Video Monitor button to preview in the Video Preview window.

Mike,

I turned off the trimmer ( which I never use) from the view menu and it works, I should have read the fine print that was driving me crazy,
Thank you very much you made my day :):)