Windows 7: Sony Vegas problem with h.264

Hi, I'm new and newbie here and I need help...

I'm trying now Movie Studio HD Platinum 10 after using version 7 because the latter didn't accept h.264 files.

But also HD Platinum 10 does not accept all my h.264 files - after rewrapping them into .m2ts using tsmuxer. Some are accepted and the others just cause the pro to crash.
So I'm wondering actually about several things...

Is there another codec like h.264 - I mean with such quality and small size, SV would accept - I can convert to? cuz all the codecs I know of with similar quality produce way too big file sizes. I have too many files and I can't afford big-size files.

If it's a problem in SV version or "model" i.e. Movie Studio or pro..etc, What would be your recommendation.




thanks in advance