First, make sure that you are using the correct capture utility (DV or HDV).
-Try turning the camcorder off and then back on.
-Be sure that your IEEE 1394 card is selected as the capture device.
-Go to Options and choose Reconnect to current device.
-Try a different Firewire port.
-Try a different Firewire cable.
Most of your suggestions were tried before I posted.
The weird thing is that the 'reconnect to current device' option is greyed out, suggesting that Vegas sees the camera. Yet it still gives the 'Device not recognised' error.
Can't try a different Firewire port or cable as I only have one of each. Frankly I'm 99% certain it's Vegas, not my cable or port.
I was convinced the tape I shot was in HDV but it was an old tape shot in SD on my old Sony cam. And here I am selecting 'HDV' to capture. And then complaining it doesn't work.