Some of the stock effects like Border on Vegas are really inflexible, so it's often best to go the long route with masking. If you move your video to the side and duplicate it to a layer underneath, you can mask a rectangle around the one on the upper layer (just make sure to keep your lines inside, and not on the white part around, the frame of the video - Vegas feather properly if you don't have your masks within the frame), and feather it in as much as you want. Add a Gaussian Blur to the one on the bottom, mess around with the settings for your blur and feather, and it should look nice.
If you don't want to mask, Cookie Cutter's your clunky alternative. You can follow a similar procedure using a feathered rectangular cookie cutter above a duplicated blurred event.
OR, if you don't like the way that works, you can use the Soft Contrast effect on versions 9 and later. The vignette tab lets you set a blurred border and then adjust its X and Y positions/sizes, so you can move around the border as you like. The issue with that effect is that it'll affect all the layers underneath the event you applied it to as well (unless there's some way to change that, I dunno), but if you're sticking to black on half of the screen then that'll be unnoticeable.
Good luck (yikes, just saw the date you posted this, hope you got it figured out by now)!