What you've not mentioned is the video dimensions. But based on the other criteria, notably the need for XP default compatibility - you'll need to use MPG1 and for 2 hours of video 1.2gb is not bad.
A VCD is designed to hold about 74mins of VHS quality MPG1 video on a 650mb disc therefore depending on what resolution you've chosen, this seem reasonable. Personally, I've also found that the settings in Vegas cause both MPG1&2 to produce better, but larger video than some other programs.
MPG1 and WMV9 (?) are the only two default codecs in XP and the latter is too new, at the time, to be much good. MPG1 is well establish and does it's job well as many here will contest for decent reasonable sized video.
If you have other video formats playing under Opus, then you must have additional codecs installed and many of these 'packs' can cause the crashing errors associated with pause, seek, etc of video control.
Regards,
Mack
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