VLC? Pah!
Yes, as several others have pointed out, VLC's a tired old dog. One of the most annoying features is when you hit pause, theres a delay.
What, am I watching this on VHS?
Media Player Classic is a truly well rounded app, but to get around the codec issue, simply download the K-lite codec pack, and choose "Lots of Stuff" during the install, and you get MPC.
Voila, you have high functionality media player, with codecs to to play just about anything, even the Bink and Smacker A/V codecs EA and Codemasters commonly use as the format for their in-game videos. Crucially, because they are system codecs, your other player apps can use them too, improving overall system flexibility.
For disc writing, I've sworn by Ashampoo Burning Studio (ver. 6, the free one) for years, and can count the number of writer drives more easily than the the number of discs I've worked through. Tiny memory footprint, extremely stable, fully featured, delightfully lacking in bloatware and I can run multiple instances, writing to multiple drives simultaniously.
I've used XBMC, and while I have no argument over cross platform issues, the interface is appalling unintuitive for novice users. I know this because I had a system with it set up for my parents in their living room.
No matter how much I tweaked the preferences or themes, they found it just too difficult to navigate.
The solution came with MediaBrowser, an open source plugin for media player which combines similar functionality, incredible beauty, and crucially, ease of use which means my parents, rather than watching telly, frequently browse through the 2TB of movies and TV using the media center remote, with the same ease that they use the DVD player