When I used the trial versions of Vegas I could render mpeg video. But I also had VMS 7 and VMS 8 platinum installed.
I did have trouble with the dolby audio in the trial version.
He is also having trouble with the audio because he has previously posted that using the trial he has used the Blu-Ray templates, which are AVC (video only), no audio. He has successfully created video on h264 because he can't load that into players (because they are avc/video only).

When you select the .m2ts template it uses Dolby Audio. That was a problem in my system until I used the full version.

I think he needs to buy the full version.
With the trial I could render standard mpeg2 no problem with mpeg audio. Maybe because I had the other Sony retail products installed it let me do that. The trial would not really let me work with Dolby Audio.

I can render all the Main Concepts forms, mp4, avc, m2t , I can render to all the Blu-ray standard formats and using the SONY AVC it will render to mp4 and avc, its only m2ts that reports an error. So I ask what is special about m2ts and 4eyes why did you render to it and not mp4?

NOT DOLBY: I can render to 5.1 ac3 independantly and if I render SONY AVC to m2ts with no audio I have same problem. (edited for this Dolby update)

4eyes, it's that GOOD vs BEST thing again. The render to m2ts works if I use your settings except making your BEST setting to GOOD. Do you remember I could not render m2t to mp4 with BEST selected?

I think if your having problems it's on the Dolby Side. Even with the full version using Dolby 5.1 is tricky, many times you need to save the template. Your projects settings must match the Dolby Encoder almost exact.

When using the trial even when I could render a xxxx.m2ts with dolby audio, it either wasn't present playing back or the file was corrupted, or vegas complained when rendering.

You can render AVC because there isn't any audio in the file.
You can render mp4 because it's not using Dolby audio, it's Sony AAC audio.
You can render m2t because the audio is mpeg audio and not dolby audio.

Using the trial If you can create a Dolby ac3 file separately I'm surprised if it played back correctly.
If you can there may be a limit on how many encodes you can perform.

The instructions I posted that you read where to create an avc/h264 video file compliant for an avchd disk. You can use that video file in other avchd disk authoring programs and it will not be re-encoded because it's avchd disk compliant (and BDMV Disk Compliant).

So you can use the xxxx.m2ts file from vegas in other authoring programs that will pass avc/h264 compliant video/audio files through it's encoder without re-encoding, such as MovieFactory 6 Plus and create either an AVCHD disk or a BDMV disk.

If you mainly playing back your videos on the computer xxxx.mp4 is fine.

4eyes.

I converted to full registered licence and same issue.
I can rendere to 5.1 Dolby Pro ac3 and it plays fine
I render with your settings but with no audio and same meassage - "no compatable codex"
BUT if I select a standard Blu-ray such as 1440x1080 15mpbs or 8 Mbps and change the mp4 to m2ts (still using dolby 5.1) IT WILL RENDER but audio is jumpy. Maybe its just my computing power. I'm not using intermeadiaries, m2t straight from the camera and I only have a P3 3.4MHz with 2BG ram. What do you think?

I don't know exactly what your doing, you do have to put the license number in for DVD Architect, so make sure to activate DVD architect. I think it has something to do with licenses and as far as I know does affect Vegas.

I think your computer is to slow to playback avc/h264 at 15MBS or 8MBS.
You may have to drop the bit-rate as low as 4MBS. I know my P4-3.2Ghz can't play them.
I don't have an h264 accelerated AGP card in the 3.2Ghz, only hd-mpeg2 acceleration.

Instead of using 5.1 change your project settings to Stereo. Then try to render a Dolby Stereo output.
The default for Vegas in that module is Dolby 2/0 Stereo.

I'm curious when the error from Vegas is displayed? Is it when you select .m2ts when modifying the template or does the error appear After you exit the template manager and when you actually go to render the video.