I have used TMPEG DVD Author to burn vids because it does not re-encode (just creates a menu). There may be a demo version you can download and test. If not, there are other DVD authoring programs with demos - that may be the best way troubleshoot and see if (a) it is how Vegas Movie encodes or (b) how the authoring software burns.

For sample MPEG2 settings go here
http://seacouver.slashcity.net/killa/winconvids.html