How to edit compressed video in Sony Vegas (Xvid, x264 etc.)
NOTE: This should work on other editing programs as well.
Enable annotations for additional info on Audio
Download Avidemux here: http://fixounet.free.fr/avidemux/down... (Windows, Linux, Mac, PC-BSD)
I used a couple hours to figure the best way to do this and I made this tutorial so other people with the same problem can save those couple hours of their time.