Even though I run the video files through NeoScene, when I view and edit - they're still a little laggy. They appear as if they're playing at 20fps or so.

I'm running Vegas Movie Studio Platinum 9, and my trial version of Cineforn Neoscene has just expired (I plan to buy once this issue is resolved).

My PC specs are:
Windows XP
2gb RAM
Dual Core 2.4 Ghz
GeForce 6600 128mg

I do have a 1.5TB HDD and a new graphics card on the way.

Any ideas on what I'm doing wrong/need?

Set the playback mode to "preview half", then it will run smoothly.

This can happen even at 1/4 resolution, if the NLE timeline settings do not match those of the actual file.

For example... you set comp to 29.97p and drop a 30p file on it. This behavior was observed in Premiere CS5.