I have an AVI file which looks and sounds perfect in Windows Media Player.

When I put it on a video timeline in Vegas Movie Studio Platinum 7.0 the video looks super distorted at points.

When I try rendering it to MPEG2, the result is even worse, turning much of the video black.

The AVI is encoded with the RenderSoft CamStudio lossless codec (LZO & GZIP compression). GSpot says it is installed on the machine with Sony Vegas.

How can I introduce this AVI to Sony Vegas without video distortion?