I had the same problem and used this site to fix it:
www . schlackman . org/programs/vlcxp.html
[remove spaces, it wouldn't let me post a link]
This worked but the dvd menus weren't working completely perfectly, so I changed the .reg file slightly, by removing the @0:1 from this line
[HKEY_CLASSES_ROOT\VideoLAN.Autorun\shell\playdvd\command]
@="\"vlc.exe\" -vvv dvd://%1@0:1"
and now it all works fine.