Posting this for anyone searching for a solution or work around for this problem. The problem is that if you are trying to render a video in the AVCHD for burning to Blu-ray, for some odd reasons Sony Vegas Pro 9 (8 and 10 as well) may hang or freeze or crash or give an out of memory error.
I have been researching the problem and trying all the solution (or lack thereof) on the internet. While the problem definitely exist in Sony Vegas and not with your hardware. I do not have a solution. I do have a viable work around.
First the issue seems to be caused by the AVCHD encoder not being able to handle certain scenario's. In one case I was rendering a video that included panning over still pictures and cross fades. at certain points the program would always freeze at exactly the same place. My fix at the time was to replace several of the stills with smaller images, and less complicated pans. I then rendered the video in short blocks on several computers at one time and joined them together re-rendering in AVCHD. Other scenario's are multiple clips in different video formats like AVCHD and quicktime H.264. The ACS Encoder does not like certain aspects of the H.264 quicktime files.
My workaround is thus. I can render the video just fine in any other format. So what I did was render the video in full 1080p using the Windows WMV codec at a bit rate of 16 megabits per second. Then reloaded the clip and rendered it in AVCHD. IT rendered easily and the video quality seems to be just fine.