Maveric, I used to capture in Vegas Video 3c from my Hi8 camera and then load it into S7 with no problems. I did this until I figured out vegas was better, too about a month to figure it out. I never did try to import the S7 capture davi into Vegas though. I never saw a need to go back.
Matrox has a free motion jpeg codec. Well, I assume it's free. I've never used it as I only use the matrox codec I download from their site when i needed to playback from a matrox RT board. Howver, it is included with their VFW codec's (also included Matrox DV, DVCPro, DVCPro 50, mpeg-2, m-jpeg).