Solved VMS 17 Build 204 - Lost Audio Track

I started a family history video project in Vegas Movie Studio (VMS) using version 17.0 build 179. This project has mixed video content, some .mpg and some .mts with some still images. A type of project I have done several times before without issue. No problems encountered at all with VMS 17.0 build 179. 30th October I got the build 204 update and for a few days I was working on the later project that does not contain any .mpg material. Today I went back to add audio to the sections with still images and section titles. I now discover that the audio on the .mpg sections that were present in build 197 are blank, no waveform or audio.
I used Derek's missing audio check list to try all the options where I may have inadvertently changed something, nothing found. I then created two new test projects. One using VMS 16 build 175 and the other using VMS 17 build 204, see screen shots. I have added two more screen shots to show that other .mts audio on the same track in my main project has a waveform and another to show the clip properties as seen in each of the test projects.
Why has VMS 17 build 204 given a different interpretation of the same clip as used in VMS 16 build 175 or VMS 17 build 179 where it was working fine before the build update? Any suggestions or help would be much appreciated.

www.vegascreativesoftware.info/us/forum/lost-audio-vegas-movie-studio-17-0-build-204--125204/ has a link with this comment
www.vegascreativesoftware.info/us/forum/mpg-clips-will-only-import-video-and-not-audio--124988/#ca778074

Thank you @Videome for drawing my attention to this new problem.
Thank you @vkmast for providing links to an explanation for this problem.

Summary for any future readers
Vegas Movie Studio Platinum 17 and Vegas Pro 18, no longer support the import of MPEG-2 video that uses AC-3 audio.
When you import this older video format, only the video component will show on the Vegas timeline.

This change only effects the following build versions:
Vegas Movie Studio Platinum 17 build #204 and newer.
All older build versions of Vegas Movie Studio Platinum 17 can still import MPEG-2 with AC-3 audio.
Vegas Pro 18 build #373 and newer.
All older build versions of Vegas Pro 18 can still import MPEG-2 with AC-3 audio.

Solutions
1. Use older program versions of Vegas Pro or Vegas Movie Studio Platinum, when working with older MPEG-2 video with AC-3 audio.
I would guess that many users of Vegas will have older versions they can re-install, when working with MPEG-2 video.
This would be the solution I would personally use.

2. Transcode all MPEG-2 videos using a Video Conversion program, before importing into your project.
I would recommend Handbrake as the best choice for this task
www.moviestudiozen.com/free-tutorials/miscellaneous-help-tutorials/595-handbrake-v1-1-1-beginners-guide-for-best-video-export-settings

3. If you are using Vegas Pro 18, you can install Happy Otter scripts to re-wrap video into an MP4 container.
Happy Otter scripts is a paid product, but they do offer a 30 day free trial.
A user on the official Vegas Pro forums shows how to do this here:
www.vegascreativesoftware.info/us/forum/mpg-clips-will-only-import-video-and-not-audio--124988/#ca778102

Thank you vkmast, A fiddle to fix, but it works using Handbrake. Although I am not a frequent user of Handbrake, I think I used the correct settings to retain as much video and audio quality as I can.

That is my post on Vegas forum, I double posted to find a response ASAP.

Thank you Derek for filling out the detail. I need to refresh my Handbrake skills to ensure I do not degrade the content of my current projects that contain this format of media. I will again peruse your excellent and detailed Handbrake guide.