Here's the deal, & having suffered through a LONG experience with an older Matrox Marvel G400, I can tell you that your card's drivers are not exactly compatible with anything since win98 fe, so if something doesn't work, look towards the great white north where they wouldn't/couldn't update the code that made their older cards work well.

That said, if you go to the properties setup for the matrox card, you'll likely see something in their dual head setup for basically creating a window -> everything in that window will go to the monitor out -> just place the window over the video preview window in Vegas. Search out the Matrox forums (at matrox.com & murc) for a bunch of other, similar things you can do.

Technically speaking, the way it works is the Matrox driver software intercepts the video that windows sends to the overlay layer. To illustrate the principle, try taking a snapsot of your desktop with std capture software & you'll get a black box where the video's playing in media player or q/time, real etc.. If the matrox software can't detect the video overlay in Vegas, because it doesn't understand the later windows api's or whatever, creating a window manually as above should cure the problem.

mike