Well as far as video playback on you computer, i've read that vista requires 2gb ram minimum for decent playback/editing. Personally my laptop with 2gb ram and vista has trouble editing and playing these files. But I have a desktop with windows 7 and 8gb ram and it has no troubles.
But as far as best format. So far i've had the best results with the following.
Click Render As...
For Save as type: Sony AVC (*.mp4; *.m2ts; *.avc)
Then go down to Template:
and select Internet 16:9 HD 30p (it's near the bottom of the drop-down menu)
File size after rendering is awesome compared to .avi (this method produces .mp4 files) and this is the suggested format for YouTube HD.
My suggestions as far as choppy playback/editing is to try to minimize the amount of programs running on your computer. Preferably only Vegas if possible. Things like iTunes and e-mail applications use a surprising amount of your computers resources, so turn them off.