Any thoughts out there? I have no idea how I'm going to grade this mess the way it currently appears.

The first thing I do with each new project is turn off ACES (and Marco, I use the 32-bit pixel format, why on Earth would anyone in the 21st Century use 8 bits?). Vegas has the obnoxious insistence of turning ACES on with each new project no matter how many times I set a project to have it off and check the thing to apply the settings to all future projects. Your image shows ACES being used, which totally changes the colors of any sources that was not created for ACES.

So, try that and see if it helps.

why on Earth would anyone in the 21st Century use 8 bits?

If your source is 8bit it really doesn't make much sense to work in 32bit. Also, to truly work in 10bit in Vegas, it takes bait more than just setting it to 32bit.

I disagree. If you apply any serious color grading with multiple controls/effects in sequence, working in 8 bits makes no sense because each one of them will be rounded to the nearest integer, so you lose the fine control over your colors. This is regardless of what format your source image is in.

When working in 32 bits, no rounding to an integer happens until after the final effect is applied, so you have much finer control over your color grading.

I disagree. If you apply any serious color grading with multiple controls/effects in sequence, working in 8 bits makes no sense because each one of them will be rounded to the nearest integer, so you lose the fine control over your colors. This is regardless of what format your source image is in.

When working in 32 bits, no rounding to an integer happens until after the final effect is applied, so you have much finer control over your color grading.

So, let's just say that we agree to disagree. Take an 8bit source, set your project to 32bit and you will see that the scopes look very different from a true 10bit source. The minimal gain that you may get is lost in the delivery and viewing method. Which means, the only thing you gained is additional render time and increase electricity bill if you want to call that a gain.

Yes, of course, we agree to disagree.

Thank you everyone for the fast reply. I appreciate all of it, including the debate.

Changing my setup to 8bit worked a treat.

One last favor, as I'm still learning a bit would someone mind explaining the reason this happened?

I come from a photography background and in that framework I understand bit depth rather well, but if I were to take a photographic image that was recorded with an 8bit source, then shifted it's pallet to 16 or 32bit, the color presentation of the image wouldn't change one bit, only the file would effectively have redundant color definitions in it. AKA wasted data space, unless I manipulated the image with tools that could take advantage of the larger color space.

Is what I'm seeing here an equivalent to data interpolation gone sideways, or is it something all together different?

I do understand that photo vs video encoding are totally different, but it's just my frame of reference.

Thanks again all!

One last favor, as I'm still learning a bit would someone mind explaining the reason this happened?

It happened because of ACES. If you turned ACES off, the problem would have disappeared. And since ACES only applies in 32-bit editing, switching to 8-bit also turned off ACES. I guess I should explain how to turn off ACES, as Vegas does not allow you to turn it off directly. This shows how:

While you cannot actually turn off ACES (the first red-circled line), you can set its transform to Off, which will stop the problem. I don’t know why Vegas acts as if all 32-bit processing used an ACES transform, but it does.

Beat me to it. Ok, so 8 bit keeps things simple and video levels are right. 32 bit gives you choices for levels, etc, so you can really screw things up.

By the way... to those who believe 32 bit processing gives 8 bit camera footage any tangible benefit, I challenge you to prove it with real life examples. Post some images please.

I have been programming image and video effects for decades (as in writing the software). This is what happens with just about every effect (with the notable exception of turning the image into its negative) in the 8-bit mode: It will reduce the total number of colors in the image. For example, if you change the contrast, even with a good contrast effect which preserves the blacks and the whites, it either brings the values closer to some value (typically the middle of the range). So far so good. But if you then add another effect, it is now starting with fewer colors than the original, and it further reduces the number of the colors. And the more effects you add, the more colors disappear from the image. That may be what you want, perhaps, and if so, go for it.

If you do that in 32 bits, the number of colors in the image remains the same. Some of them will be outside of the 8-bit range, of course. So, if all you do is apply one effect, the final result will be the same. But if you apply more effects, they will be calculated on the intermediate values. And no matter how many effects you add, the number of the values is not reduced. Only at the very end are the values rounded to an integer (and of course, you can render it in 10 bits or whatever). This is a fact. Contra factum non valet argumentum.

You can also end up clipping and crushing. That is easy to fix in 32 bits, impossible to fix in 8 bits.

Besides, computer graphics algorithms are optimized for values between 0 and 1. So, chances are that if you use the 8-bit mode, various plug-ins will start by converting every 8-bit pixel into a 32-bit pixel, process it, and then convert the result back to 8 bits. And the next plug-in will take that, convert it to 32 bits, process it, then convert it to 8 bits. This is a waste of time.

Back in the 1980s, we used to go out of our ways to avoid 32-bit processing because it was slow. Nowadays, it is as fast as integer processing and some operations are actually faster.

At any rate, I don’t care what you do. If you want to use 8 bits, use 8 bits. I use 32 bits because for what I do, it makes a difference.