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I thought you said your MP4 files were working fine? Nonetheless, check the codec used for your mp4 files by using a program like GSpot. Also, when installing KLite, make sure you installed using "Lots of Stuff", so you get everything you could possibly need.
Your laptop (I'm assuming it's a laptop now) is probably overheating when playing WoW due to your graphics card. It seems reasonable because Sony Vegas does not use gfx power but WoW does.
Get a temperature monitoring program like Rivatuner or Speedfan to check the temps of your system. If some temps are unreasonably high, I'd suggest getting your laptop checked out.
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