32 bit vegas is limited to using only 2GB of memory, you can increase this with a memory fix.
http://www.ntcore.com/exsuite.phpdownload the CFF Explorer, open up vegas80.exe, sonymvd2pro_XP.dll and the .dlls for any format you are using (they are located in the "FileIO Plug-Ins" folder).
When you open a file in CFF explorer enter the "File Header" section, and click the "Click Here" in the "Characteristics" row. It will bring up a bunch of check boxes, tick "App can handle >2GB adress space", then save file. Do the same with other files.
This worked great for me, and it increases rendering speed too.