I use Vegas 10, but I think these two versions are very much alike.
-Try Project -> Render As...
-By the drop down box that says "Template:", click the button that says "Custom..."
-In here, you can specify all of your video details such as resolution, framerate, pixel aspect ratio, and codec.
*Note, you can use options here which are entirely different from your project properties
. Make sure you're using the correct aspect ratio when you set your resolution, or it may come out skewed. You can set the project parameters in Project -> Properties. You will always get the best final outcome when the project properties match the output settings.