I am using VEGAS Pro 17.0. My video is 1080 x 1920 (vertical video), and so is the project settings. Although when I go to render it and select a template with the same exact aspect ratio it gives this message, yet it successfully renders in any other aspect ratio.
I've searched for everything and tried everything, but I haven't solved it yet.
A simple forum search for "rotate phone video" will lead you to two pages of answers, many of them relevant to your question. I suggest you try that first.
+ give here a screenshot of your used projectproperties and rendertemplate (exact and maybe customized))
I personally never had issues when selecting Magix AVC/AAC MP4, customized setting of 1080x1920 resolution.
Here's mine:
Share your project and render settings if you still not able to render.