It could be a number of causes, Vegas uses resources differently for greater efficiency than some other applications do. Does it just lock up? No messages?
You might try reducing the graphics acceleration, and also resizing your preview window to a smaller setting. This often helps deal with problems.
My system has a Pentium 4 1 GB RAM, 250 GB hard drive,and Windows XP. I am using a Sony DCR-VX 2000 camcorder transferring through a firewire. I have used Nero and Cyberlink with no problem. When I say lock up, I mean my whole system, without any error messages.