Ok basically, all of you are correct but wrong at the same time.
I have done a lot, and I mean a lot OF RESEARCH on this.
This generation GPU's do not work on Sony Vegas GPU rendering especially 11, as that's one of it's main features, Sony Vegas have done the patching required for the 7XXX and the GTX 6XX series.
It's Nvidia and AMD that need to realize that they've buggered up and include it in the next patch.
If you render with Mainconcept MP4, again with nvidia's cards it does not work and persist with that exact same error, yet in the properties it detects my CUDA cores on my 670, I've had this issue for ALONG time!
Basically, if you use the alternate (Sonys codec), like you suggested, it actually DOES NOT utilize the GPU at all! I stress this a lot to you, it still renders with the CPU.
I've done many tests and there was no significance. Anything until Nvidia and AMD patch Sony Vegas GPU rendering will have to be done on GTX 400-GTX 500 series and AMD upto 6XXX.