Play around with these until you get closer to the file size you are after. In Vegas when you go to File> Render As you will see the drop down list for file types next to 'Save as type' after choosing your file type you should see a dialog box with tabs at the bottom video audio etc - on each of these tabs are settings that can be adjusted - the most common way of reducing file size is to reduce the video bitrate setting and/or the quality slider. AGK is a freeware compression software that uses either the XVid or DivX codec to compress with less loss of quality than other codecs. I use Premiere Elements as my video editing software, save as a high quality (and high file size) avi file then use Auto Gordian Knot (link in my signature) to compress. You can use different codecs and other settings to compress your video - remember that the more compression the more loss of data and therefore loss of quality.
