So I tried everything I could with the .avi, but I get the same encoding issues with every encoder I have on the list, however as it is working correctly with the .mpeg now, that's not really an issue for me.
More importantly, even after the updates I'm still getting the blank waveform audio line when I import video clips. If I split the audio and video outside of VideoPad, then import them separately, I have no issues, but importing as a block A/V file doesn't work. After you mentioned the extra blank channel on the file, I figured that this would be a stereo recording issue, but I get the same problem still with files recorded in mono, so there's no real possibility of multiple channels.
Any ideas?