Ok I went and shot a Ladies Luncheon, using a friends Panasonic P2 Camera.
I Then ingested the footage via a firewire cable. When looking at the raw footage on my hard drive where it saved the footage is fine.
But as soon as i import it into Vegas (Or even Premier for that matter) It becomes "Pixelated"
At first I thought it might be just the preview, so i rendered a small snippet but even the rendered footage turned out the same.

I have tried multiple settings to try and get it to work but still nothing.
Here is a picture of what is happening.

http://i437.photobucket.com/albums/qq91/MeZdee/Settings.jpg

This does appear like an interlace issue, rather than pixies?

Have you set your Project settings to match your footage?

I may be going out on a limb here, but your Project Media Pane is suggesting that your Footage is Progressive and your Project settings in the Preview is suggesting Interlaced? It could mean Vegas is trying to make interlaced out of NONE interlaced. Could that be an issue here?

Do we know that Pana P2 stuff plays ball with SONY Vegas?

Grazie

Yeah my friend suggested that as well and i changed the settings accordingly and still no go!

You may be on to something with Panasonic P2 not working with Vegas. But the problem also happens in Adobe Premiere. May have to look more into it.

These threads might steer you in the right direction. Looks like you will need third party software. Good luck.

http://www.dvinfo.net/forum/what-happens-vegas/142000-vegas-p2.html

http://www.dvinfo.net/forum/panasonic-p2hd-dvcpro-hd-camcorders/235744-need-help-sony-vegas-panasonic-p2-cards.html

And here is the software they refer to:

Raylight by DVFilm - Edit HVX200 DVCPROHD with Vegas or Premiere (http://www.dvfilm.com/raylight/)

Cheers heaps Ian! I suppose I should of searched before posting :P

Pleasure, Sam. Did you get it sorted in the end?