I don't know if you have the latest version of VMSP, but if you do, use Cineform. It's smaller than DV and uncompressed, and it's visually lossless. If you don't have Cineform (click "custom" to find it), use DV. It's smaller than uncompressed.
I think that cineform was on VMS 7 too. When you are on the avi "render as" dialog, click CUSTOM. Then click the Video tab, and from the "Video format" drop down menu select Cineform. There, you can decide to export with square pixels or not (e.g. instead of saving as 720x480 interlaced/anamorphic, you can export as 874x480 progressive with square pixels).
Sony's DV codec is amazingly good. Use that for good quality with a much smaller file size than uncompressed. If your original material is DV then this is the best option as the quality loss will be somewhere between almost none and none at all.
DV is about 13GB/hour, or about 1/8 the size of uncompressed. And once again, if the original material is DV then the result will be less quality loss even than using Cineform. During sections where the video isn't being modified Vegas simply copies the original frames without modification, resulting in zero quality loss. Even where modifications are being made, Vegas will still be going from 4:1:1 to 4:1:1 color space so the color data will be manipulated less. And ... DV is available in Vegas 7.
If Vegas does not re-encode unmodified DV frames, then yes, the DV codec is best. I haven't used DV on VMS, so the only no-recompress experience I have is with Vegas Pro and HDV. If I had to archive HDV on VMS, I would go for Cineform, as VMS yet doesn't have the HDV no-recompress feature that Vegas Pro has.