Have downloaded and run MediaInfo. Results posted below. Looking forward to the assistance. Thank you for your response.

General
Complete name : F:\CamileoS20_file.AVI
Format : AVI
Format/Info : Audio Video Interleave
File size : 832 MiB
Duration : 14mn 17s
Overall bit rate : 8 134 Kbps
Recorded date : 2010-12-22
Writing library : AMBA
ICRT : 04:14:01

Video
ID : 0
Format : AVC
Format/Info : Advanced Video Codec
Format profile : Main@L4.0
Format settings, CABAC : Yes
Format settings, ReFrames : 4 frames
Format settings, GOP : M=1, N=8
Codec ID : H264
Duration : 14mn 17s
Bit rate mode : Constant
Bit rate : 8 001 Kbps
Width : 1 920 pixels
Height : 1 080 pixels
Display aspect ratio : 16:9
Frame rate : 29.970 fps
Color space : YUV
Chroma subsampling : 4:2:0
Bit depth : 8 bits
Scan type : Progressive
Bits/(Pixel*Frame) : 0.129
Stream size : 818 MiB (98%)

Audio
ID : 1
Format : AAC
Format/Info : Advanced Audio Codec
Format profile : LC
Codec ID : FF
Duration : 14mn 17s
Bit rate : 128 Kbps
Channel(s) : 2 channels
Channel positions : Front: L R
Sampling rate : 48.0 KHz
Compression mode : Lossy
Stream size : 13.1 MiB (2%)
Alignment : Split accross interleaves
Interleave, duration : 21 ms (0.64 video frame)

Upload a sample of your camera footage somewhere (MediaFire or DropBox).
Vegas does not natively support AVC/AAC in an AVI wrapper.
It may be possible to simply remux to an MP4 wrapper.

Thank you for your reply. I will try to figure out how to upload a sample somewhere. Meanwhile, I did some research on "muxing" (a new term for me). I downloaded what seems to be a recommended program, YAMB, and tried it on a short video file. Failure. I will paste the log file below.

[11:29:58] : Yamb 2.1.0.0 beta 2 started !!!
[11:29:58] : OS type detection...Windows XP Professional x86 (version 5.1, Build 2600 : Service Pack 3)
[11:29:58] : MP4Box found... C:\Documents and Settings\New User\Application Data\Yamb\MP4Box.exe
[11:29:58] : EAC3to found...c:\documents and settings\new user\application data\yamb\eac3to\eac3to.exe
[11:30:15] : muxtest.AVI loaded.
[11:30:28] : Creation of muxtest.mp4...
[11:30:28] : Command Line used for Creation : "C:\Documents and Settings\New User\Application Data\Yamb\MP4Box.exe" -add "C:\Documents and Settings\New User\Desktop\muxtest.AVI#video:fps=29.970" -add "C:\Documents and Settings\New User\Desktop\muxtest.AVI#audio" -itags tool="Yamb 2.1.0.0 [http://yamb.unite-video.com]" "C:\Documents and Settings\New User\Desktop\muxtest.mp4"
[11:30:28] : File saved in C:\Documents and Settings\New User\Desktop\
[11:30:28] : Error importing C:\Documents and Settings\New User\Desktop\muxtest.AVI#video:fps=29.970: Feature Not Supported
[11:30:28] : Creation failed.
[11:30:28] : Total Time Elapsed...
[11:30:42] : Yamb 2.1.0.0 beta 2 closed.

I have to admit, having to process each of my video files before importing into VMS might be a dealbreaker for me. I might start looking for another editor, but I'm not ready to give up yet. I was hoping it was just a codec issue. I don't make feature length Hollywood films, but they do get a little complicated. I think I'd be happy with the simplicity of Windows Movie Maker if it just allowed even one more video and one more audio track. I've had OK results with Adobe Elements 4.0, but I find it cumbersome and slower. I really like VMS 6, but, alas, I have this audio problem. I'd probably upgrade to a higher VMS version since I already have a good handle on the interface, but I'm assuming I would have the same problem since I tried VMS 10.

Any feedback you can give me would be appreciated. Thanks.

The first thing I will try (upon receipt of your file) is AviDemux.
You might also try the trial version of Vegas Pro 10, or wait for the release of VMS 11, the timing being anyone's guess.

9MB sample file at:

http://www.mediafire.com/?t2crzmf5t3kyque

Also, I downloaded Avidemux and tried it. It made some kind of file but vid was herky-jerky and VMS didn't like it either. However, interface is way above my head when it comes to settings, so it probably was an operator error.

OK, here is a workaround for you.

Open the video in Avidemux. Say "no" to both message screens. Under audio select "PCM" and format select "DUMMY."

In the menu, go to Audio->Save, and type in a file name with the extension ".wav"

Open your original AVI in Vegas, and the new WAV file directly below. You are good to go.

Be sure to set your Vegas Project Properties to match your video file. If you don't know how to do this, do a search for "match media settings". It is a specific procedure.

There may be a more elegant solution out there, but this is quick and it works.

Hmmm. I appreciate the suggestion. I may use a variation of it as I move forward. However, a hurdle I can see is that any particular clip, let's call it a 5-minute clip, will be chopped up into as many as 20 parts and moved around to different places on the timeline. I'm not sure that the synced audio/video can be moved intact. For this particular movie, 90% of the 45 minutes of video WILL NOT be using the associated audio as I will be laying down a background "soundtrack". Perhaps I can render just the 5 minutes for which I DO need the audio into a usable AVI (A/V synced) with another editor and pull it into VMS. So, it may be a viable workaround for this project but I usually use the actual audio recorded with the video so I see major problems in future productions.

I thank you for the Avidemux instructions.

I did try the VMS 10 trial last night with the same results as v6.

And right now it's out into the sunshine to get some yard work done on this beautiful Sunday afternoon in Illinois.

Any other suggestions on the audio/video issue would be gratefully received.

You can group an audio and video event by selecting them and pushing "G" on your keyboard.

yeh, we basically have identical problems here.. I too am using a Toshiba Camileo but it is an H30... not S20.. i would assume they still record using similar/identical type files though.. especially if we are having the same problems... its so frustrating.. can no one offer a solutution here? is the only way to use a video converter? that being the case, what is the best file format to convert too? and what is th best video converter to use?

can no one offer a solutution here?
The workaround I posted works with JimPeoria's file

is the only way to use a video converter?
No video conversion is necessary
Rewrapping the audio is all that's needed

That being said, this compatiblity issue will never get solved unless you guys submit support tickets to Sony. This forum is a discussion area, not technical support.