The mess that K-Lite caused was the sheer number of codecs it installed. If something goes wrong and you can't play something, it's madness to try to figure out what's not playing correctly.
Perhaps the reason you can't get VLC to play nicely is that you have all those codecs on there?

All I know is that I've had zero problems with it, and in my experience the more you bother with codecs, the worse things get. I made the decision a few years ago to never install any codecs other than Divx, and since then I used mplayer until I switched to VLC because it had a GUI and could play DVDs (speaking of quasi-legal).
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The only thing I can think of that you might be talking about is the installation of Media Player Classic
You need to install MPC? It's always been a standalone file when I've used it, and it always works quite well. And I've never installed Real or QT alternatives. Why? because VLC plays them.
Try my method sometime. When I reformat my system, my installation order is always the same:
Firefox
AVG
VLC/Divx
After that I don't need to install a single other thing to play 99% of the files I've come across.
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it can help you see what codecs are on your system and how the system is trying to use them.
Neat! I wasn't aware it could do that. Thanks for the tip!