Save to a new filename, then close Vegas & reopen it and see what happens.
I've just started having the red frame problem in the past couple of weeks. Usually it's perfectly fine after i close the project and reopen it. Often i don't even have to restart Vegas. Sometimes just re-adding that clip to the timeline again makes it all better.
There was some info on the red frame issue in this http://www.sonycreativesoftware.com/forums/ShowMessage.asp?ForumID=4&MessageID=701253Post[/link]. I've been running into red frames recently after having had none since switching to Windows 7 64bit. I don't get a lot, and so I've been copying/pasting the events into a new veg, then when I import them back into the original veg, the red frames disappear.