I've been waiting for Vegas 8 isn't out yet according to Sony's site,
you got a beta version or did you mean V7? Anyhow, in Vegas unless
they changed from the older version I'm using it comes with a separate
little applet called Video Capture. It is easier (for me anyway) to
control your camera from here rather than the main program.

In the main Vegas application on Menu Bar under Options click on
preferences. Then the video device tab. Under device change to OHCI
compliant IEEE 1394/DV. Click apply, then ok. Until you do this while
Windows might "see" the camera, it won't get controlled properly if at
all by Vegas which is really what you want.

Personally, I prefer to hook up the camera to computer via firewire
then feed the camera's video output to an external tv/monitor. This
should show you the video stream in real time as you capture and send
it to Vegas. If you rather not do this once the capture starts it
should display in the camera's LCD screen. While you can capture
directly to the timeline, there is no real advantage and in fact
better to capture so you always end up with a editable DV-AVI file
that gets stored on your computer's hard drive automatically with this
method. Since Vegas uses a ultra high quality codec from Main Concept
you can re edit the file over and over without any noticeable quality
loss.