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For what? Different purposes have different answers.

If DVD, use the DVD Architect 24p Widescreen DVD template under MPEG-2. You'll have to render the audio separately as AC-3 or as WAV.
 
Please export like this http://eugenia.gnomefiles.org/2007/11/09/exporting-with-vegas-for-vimeo-hd/ BUT with two important changes than what the tutorial suggests:
Resolution at 640x360 instead of the suggested 1280x720 (for exact 16:9)
Bitrate at 1,000,000 bps for video, 96 kbps for audio.
23.976 frame rate (provided that you shot that way, or you have removed pulldown).
Everything else is the same as in the tutorial.

This will produce a video that has good quality at a respectable resolution, and at the same time it will fit at the 50 MB per file limit that DVXFest has. If your video is less than 5 minutes, you can use a bit more bitrate/resolution.
 
That has nothing to do with the suggestions, there's something else at work there. Could even be the problem of your media player. Try re-exporting with audio at 44.1 instead of 48 or the other way around btw, just in case.
 
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