Originally Posted by http://en.wikipedia.org/wiki/Sony_Vegas

With version 8.0, Vegas now reads MJPEG AVIs (usually from "video" setting on digital still cameras). (With prior versions of the software, installing an MJPEG codec sometimes fixed the problem.) 3rd party codecs are supported but it can be difficult to see which codec is being used to play back an AVI. Some of Vegas's codecs are 'native' or built-in.