I've installed the xvid codec, and any xvid files show correctly on the timeline.
Trouble is that the xvid codec does not show up in the "render as" dialog.
Using vegas 9.0d.
Also use virtualdub and the codec shows up there.
Where are you looking? Selecting AVI just shows you existing templates and there won't be a template for Xvid unless you create one. Select the default uncompressed template and press the Custom button and then on the Video tab look in the Video formats dropdown list for all of the AVI codecs. You should see Xvid listed in there.
Also make sure that you are using the correct version of Vegas Pro. If you installed a 32-bit Xvid codec you need to use the 32-bit version of Vegas. If you installed the 64-bit version of Xvid you need to use the 64-bit version of Vegas.