Judging by the settings in the image you attached, it looks like you are encoding at 8Mbps. Which is larger than what you need for web delivery. For GFQ, I use a bitrate of 1.5Mbps encoded through Debugmode Frame Server, and MeGUI. This usually produced a 500-700MB file for one hour shows.

If you are only recording at 1Mbps, I would recommend upping it to 2Mbps. Then when you encode in Vegas, set a Constant bitrate of 1,500. It's always best to record at a higher bitrate, then you can change it when you edit without seeing as much quality loss.

If you are curious as to using Debugmode Frame Server, there is an excellent thread discussing it here with lots of useful information.