Lots of discussion on this subject in this forum. Here's a recap: The only special hardware you need is an OHCI IEEE 1394 card, camcorder with pass through, and a TV set. When you click the icon for external monitor preview, Vegas routes the digital video signal out through the computer’s OHCI IEEE 1394 card. When connected via firewire cable to a d/a converter, say your camcorder in VCR mode, the signal is converted to analog (NTSC or PAL) suitable to be fed, say via s-video cable, to a television set. The audio portion is still output through the computer’s sound card. Some use a dedicated d/a converter rather than their camcorder, and some use a professional broadcast monitor instead of a regular television set.