The license key unlocks the MPEG-1 and MPEG-2 features. Check you aren't running VV3 or Vegas4 in demo mode. MPEG-2 editing on the timeline isn't a native format for Vegas. Some find it better to go via a frameserver, like DVD2AVI which delivers the equivalent of I-frames even when you have your timeline on a B or P point of time in the original MPEG. YMMV.