I can't seem to get Vegas to capture from my camera properly. I have a bunch of 1080i footage shot by my HVR-A1U, yet when bringing it into Vegas it's very blurry/pixelated, and arguably worse then SD footage.

I'm 99% sure the camera captured in 1080, as every setting I could find has it showing 1080, HD tape, camera itself won't even play back the footage when in SD mode and Vegas won't recgonize it in SD mode either.

Just going to File-->Capture Video--> selecting HDV and importing is what I have been doing, the project properties are for 1080I and I render to a 8MPBS 1080i .wmv as well. It's pretty bad quality pre and post render.

What am I missing here?

Hmm, some more interesting things.

I captured some stuff with HDVclip, and it looked great. Thinking I had found the solution I captured some other clips, and noticed the change in quality based on setting.

Anything we shot in front of the green screen looks great, anything we shot on the convention floor looks awful. I obviously didn't change the HD setting at all between the shots.

Something is wrong as at very basic level.

There should be no difference at all when performing an HDV capture regardless of the program used. HDV data is transferred digitally over firewire - there are no analog stages that can distort the video.

I'm not sure how you are getting pixelization in your capture. Usually, the worst you can expect in a digital capture is dropped frames, but pixellization is something altogether different. It is not possible as the capturing program simply stores the digital data as received from the camera without modification.

I have an HDR-HC1, a little brother to the A1U. I've never had a problem capturing from it to Vegas, but I always check that the autoconvert feature is turned off. The autoconvert feature will convert HD video to SD.

Forget Vegas for a moment. How do the clips look/playback on the camera? How do the raw clips play back...are they fine to begin with.? If you're using Windows 7 the m2t files should play back in WMP. If they play back fine, then the problem is your settings in Vegas. If they don't then the issue is your footage. You need to figure what is happening and clear things up a bit. This is where you need to start, by figuring the source of the issue.

There is a lot of useful information in this thread. http://www.dvinfo.net/forum/what-happens-vegas/271329-maximizing-hd-sd-quality.html Pay particular attention to the comments about Lanczos resizing with VirtualDub. The quality difference is huge when resizing HD to SD.

I agree with Jim, my workflow now always includes Virtualdub for resizing to DVD, the difference is indeed huge.
When played back on a 50" plasma, the DVD will look, to most average people, to be in HD.
Before using this workflow, the DVD looked washed out and very ordinary when upscaled.