I just installed V7 and DVDA4 with no problems, including rendering .ac3 5.1 surround audio. I would un-install V7 and D4, then re-install both.
FWIW,
Rick Z

I has mcplug 2.0.0.2203 & ac3plug 1.0.0.2441 loaded to Vegas 7? but...
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First I prepare a six 48/16 mono .wavs in SoundForge:
For LFE: 10 seconds -12 dB Sine at 100 Hz
For channels: 10 seconds Sine started at 20Hz, ended at 20 kHz, then modify:
For Center -1 dB
For Left Front - faded in
For Right Front - faded out
For Left Surround - 1st 5s at -12 dB, last 5s at -6 dB
For Right Surround - 1st 5s at -6 dB, last 5s at -12 dB
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I'm put this .wavs to Vegas 7 Surround project (with channels Pan Type -6 dB Center)
and try render as .ac3 with 5.1 Surround DVD preset.
Any (of 3) times I render it, I has an "tr-r-r-r" sound
(http://kanst.mediatory.ru/vegases/first.ac3)
Then I made the same project in Vegas 6 and rendering result was OK.

This two .ac3s I'm convert in BeSweet
BeLightGUI command line:
BeSweet.exe -core( -input "_.ac3" -output "_.wav" -6ch -logfile "_.log" )
and only V6 result was nearely the entire waveforms.
(http://kanst.mediatory.ru/vegases/001_51.jpg)

Then I open saved V6 project in Vegas 7 and rendering result was OK now!
(as in listning test and after BeSweet).
(http://kanst.mediatory.ru/vegases/7.ac3)
Then I tryed three ways:
1. Multiplex 7.ac3 into .mpg without video;
2. Put it in DVDA 4 project with picture as a video and prepare to HDD;
3. In Vegas 7 Import DVD Camcoder disk from prepared folder.

All this three results (mpg/VOB/mpg) I try to put in Vegas 7 Surround Project
and get only stereo downmix!
(http://kanst.mediatory.ru/vegases/002_51.jpg)
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Then I try to Decrypt a little part of ALIEN_SE DVD
(check to save only video and one 5.1 DD soundtrack into new VOB)
This VOB (and multiplexed .mpg with .ac3 encoded in Vegas 6)
Vegas 7 split at 6 channels (4 tracks), with levels at least 20 dB
lower, then must be. After rendering this opened part to new .ac3
I near tr-r-r-r sound again!

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Is this mean, that Vegas 7 can't work with surround now?

There is a 5.1 rendering problem in Vegas 7.0a build 115 that is most commonly going to be exposed by AC3 surround encoding. We have fixed this problem internally, it is being tested now, and the fix will be released as part of a general Vegas 7 update "soon"

(we cannot promise an exact release date at this time).

Ah, that explains why I had no problem with plain V7, no 7a.

While you're working on that, maybe put together an .ac3 De-Coder too ? PowerDVD plays back the .ac3's ok, but re-arranges the channel output, so I have to use a different matrix on my RME Multiface, then when I go back to Vegas and forget I've changed the routing, things sound strange. Would be more convenient to skip that. And it certainly would be nice to be able to play back the .ac3's one has just created.

Sorry, this is an old comment on my part, Peter has already responded, although not with an answer on whether we might see a DeCoder in the future.

Rgds,
Rick Z

.AC3 decoding is not supported in any of our apps. If you need to evaluate .AC3 encodes at the professional level, Dolby reccomends using their high-end hardware decoders.

Further info that may be of interest:

You can in Vegas 7 import (unprotected) DVDs that use stereo or 5.1 AC3 audio. File>Import> DVD Camcorder disc. It doesn't have to be a DVD camcorder disc, it can be a disc that you authored in DVD Architect or similar. You can also point to a DVD image that you've copied to your drive, and if the directory and file structure is intact (unmodified from the DVD disc original), it should import without any problems. If it is a hacked commercial DVD, all bets are off, untested and unsupported.

If your DVD disc has 5.1 AC3 audio on it (Vegas 7):

Add the imported files from the project media list, the audio will come into the timeline as stereo, downmixed per Dolby specs, if your project is stereo.

If your project is 5.1, you will get a set of events with all channels present and editable, and on the drop to the timeline Vegas will set up the panning for you on new tracks. You can swap channels around or assign them as mono to individual events if needed (rightclick event>channels)

Dolby QA has tested and approved this.

Tips:

1) Use the import menu rather than dropping .vobs on the timeline.

2) On the encode side, there is a bit of a content-side dependency but if you set the Dynamic Range Compression options to OFF, you will generally get a very close db match to PCM audio. Some people use both on a DVD and have asked how to match levels more closely, so this is worth trying.