Sims 3 Issues With Sony Vegas

[emilybethhh]

Sorry if I have posted this into the wrong area, but this is about problems with Sony Vegas pro 10.
I am going to start creating movies on sims 3 (after being a fan of creating them no the sims 2), anyway I have sony vegas pro 10 and I imported the selected clips into sony vegas. However, when I do the videos seem to pixelate at random points and run slow. I even rendered one of the clips thinking it was just running like that in the programme in order to speed the process of editing up, however it is still the same after I have rendered it. I got the clip (without being used in sony vegas, so straight from the Sims 3 videos folder) and uploaded it to Youtube, this is it:

So it is a normal clip, but Sonu Vegas pixelates it and I just want it to be HD and be able to add effects ect to it and music. What can I do? :S

( I am trying to upload the rendered clip to Youtube but its been uploading 10 minutes and is currently at 1%)
Example of pixelated part:
sony vehas 2.jpg
My properties on Vegas pro 10: http://i53.tinypic.com/2ijmc0x.png