You may want to post in the "VideoFactory/Movie Studio" forum, since that's the correct forum for the software you're using.

Starting with Vegas Studio 6 you have a very easy way to do this. Place the video you want inset smaller on a track above the main video track. Click the Track Motion button in the track header (looks like a larger rectangle with an arrow in the corner pointing to a smaller rectangle). You'll see a dashed frame line. Drag this line in smaller to make the image smaller, then move it where you want it to be in the full frame.

There is an alternate method used with older versions and is still functional in version 6. You may prefer it so give it a try. Open up Pan/Crop for the clip you want inset. This works somewhat backwards from Track Motion in that the dashed line represents the full video frame rather than the video clip. To make the clip smaller, drag the dashed line out bigger. After getting the size right you can move the frame to position the smaller clip within the frame.

The advantage of Track Motion is that it will change the entire track all at once and any video clip on that track will be affected. This is also it's disadvantage, in that if you only want to inset some clips, or you want them different sizes or positions, you'll have to use pairs of keyframes to set each clip.

The advantage of Pan/Crop is that it affects each clip individually and gives you easier control. The disadvantage is that you must set it individually for each clip.