There are several variations, but the basic idea:

Track 1 - Video of water radiating ripples. (You can probably shoot this in the kitchen sink if the light is right.)

Track 2 Place the picture you want to affect.

Click the parent child arrow to the left of Track 2, making Track 1 the Parent of Track2.

Click the Parent Overlay Mode button (marked M) in Track 1. Select Custom / Height Map.

Play with the settings till you get the effect you want.
You may also want to try Displacement instead of Height mapping - moves the pixels differently as they are affected by the light rippling on the water.

Acknowledgements: This method is adapted from dse's VASST Adelaide presentation last March.

I could have sworn that Vegas had a circular ripple effect, but now i can't find it. Hmmm. Did some of my FX get lost? I dunno. However, i did try creating my own ripple mask and it worked quite nicely. Is this the effect you're after?

http://www.vegasusers.com/testbench/files/chienworks-circular-water-ripple.mpg

If that's what you want, i can post the mask and a sample .veg file as well.

I gave it another try using height map, bump map, and displacement map to see the difference in effect. The previous try used only the displacement map.

http://www.vegasusers.com/testbench/files/chienworks-circular-ripple-h_b_d.mpg

WOW - almost - i suppose a lot mroe subtle - more like the centre of that rippling is caused by one droplet of water, or an ever so slight touch with a finger tip. Great demo, now i have seent hat i will try myself before try with your files - thanks - i may be begging you later on :)

While i am asking about these effects - my wife asked me to create a title for her friends wedding video, peoples names and the date etc in the centre of the screen. She then wanted it to either appear as though it was made of water and kinda congealed into the text shapes, or began as the text shapes and dissapated/spreadout over the whole screen and into the first scene.

Any clues on how to tackle this?

You can use the same water effect - but either start with high Height Map settings and keyframe down to zero, or vice versa.

Experiment with different patterns of water turbulence.

Kelly -

That was EXCELLENT! Can you post a veg, and any other "needed" media?

Thanks

Frenchy

http://www.vegasusers.com/testbench/files/chienworks-circular-ripples.zip

This .zip file contains the circular ripples bump map as an MPEG-1 file (you may want to render it out to DV AVI for your own use) and a sample .veg file showing it's use. Replace the cookie still image with your own media.

This .veg file is from Vegas 4.0d and is set for NTSC 29.97. The MPEG file is 29.97 654x480 encoded VBR 4Mbps average and 3 seconds (90 frames) long. To make the effect go faster or slower, Ctrl-drag the end of the clip.

Oh, and for those of you who are terribly curious, i created the bump map file in the animation software i've been writing in Visual Basic 6.