Video Formats/Video Converters (Please help!)

[NellyEdits]

I've been editing for about five years now, more or less. I started editing when I was really young, so before I could care less about my footage quality. But now that I'm starting to become serious about my editing, I need help. I convert my footage with Xilisoft to MPEG, which works on my Sony Vegas. No other video format works for it, because it has a major lag issue, which makes it nearly impossible to edit. The quality goes from amazing (in WMV) to grainy and completely awful (in MPEG). I realized that this also occurred with all the other series that I have downloaded. Now that I'm having problems, I'm starting to become really frustrated. I love editing and have a passion for it. But all these problems are making me feel like editing is more of a chore then a hobby.

Is there anyway that I can get other video formats to work in Sony Vegas? or Is there another converter that will not ruin the quality?
I currently use Xilisoft, and today I tried using Format Factory and the result was even worse.

I'm becoming really desperate, and I'm willing to try anything. Any help would be really appreciated! Thanks.

[MOD258: Redacted. Please read the rules.]

[BasharOfTheAges]

Read <a href=http://www.a-m-v.org/guides/avtech31/>ErMaC & AbsoluteDestiny's Friendly AMV Guides Lovingly Overhauled Largely by Zarxrax</a>?

[NellyEdits]

Read <a href=http://www.a-m-v.org/guides/avtech31/>ErMaC & AbsoluteDestiny's Friendly AMV Guides Lovingly Overhauled Largely by Zarxrax</a>?

Will do! Thanks!