So, I get a bit lost when I look into my FCP options and HD / HDV options. I'd like to get my head around it before I go shoot and edit some real stuff.

My First question is can i use external video palyback? i can capture off my little handycam, but when i try to set FCP to play back externally I can't get it to work, all the options are always grayed out

FCP7
Easy Setup 1080i50
Sony HDR-HC5 (Yes, HDV1080i)

Hi Ryan, for external HD playback you need a Kona card or Blackmagic Deckink to output HD footage onto a monitor (or a Matrox MXO).

Basically you need some additional hardware to be able to preview your HD as you edit, you can't preview it through your camera.