Which is best to use and why?

Using the Classic Wave Driver for your SB Live is the best choice. However, you should consider locating and installing the SB Live ASIO drivers. (They are not easy to find, but do exist.)

Vegas is optimized for ASIO driver usage. It provides the lowest possible latency model for Vegas. Additionally, it provides the ability to monitor input in software when recording.

Ideally you would have a modern audio solution that provides ASIO drivers as its primary I/O model.

This said, you can use any of the available audio driver models Vegas exposes, with the understanding that you will have limited control over latency and some functionality related to audio i/o being less than if you used a audio device through ASIO.

Peter

Totally FWIW...
I've had prob & others have reported prob from time to time in Vegas over the years with the audio driver preference. Left set to ASIO Vegas can be a bit flaky, especially when opening/creating projects. Recently in win7 64, 9C can stop playing video, apparently until it's closed/restarted or that audio setting is changed -- look for the thread in the video section. When the focus is on video I normally leave it at the 1st choice, the MS mapper if I remember correctly, for more trouble free use. When I'm working with the audio portions I switch to ASIO.

Personally I've been using Creative cards since Vegas came out with 5.1 audio -- Sony said in the forums that they were the only ones that supported the full Vegas 5.1 feature set. [Remember that part cause that was the only thing that would/could have caused me to buy a Creative card at the time]. ASIO is part of their driver pack, & drivers, while constantly maintained with regular updates (if far apart), are normally a glitch-ridden PITA to set up. Whether it's the drivers, 9C, or a combo, in 7 64 however don't have the full speaker setup options when switched to ASIO [something I handle by re-booting into XP Pro SP3 32 thank you very much].