On my freshly installed ArcaOS partition, I downloaded, unzipped, and moved vlc2 to the programs directory and added the LIB path to the libpath statement in the config.sys. After creating a program object, I tried to execute. Error message. Using pmdll, it said the vlc.dll could not be found. Location on lib directory in config was correct. I thus did step 2. I copied vlc2 usr subdirectory directly over the usr directory found on the drives root directory. Deleted and remade a new program object. Same error message. Used pmdll again and this time it could not find the idn11.dll. Using yum to search for the DLL, I down loaded the package containing the DLL and installed. Now VLC works.
I believe no matter how you install VLC, it will not work until tha idn11.dll is installed. Once installed, VLC will work from any location when updated.
Also, under properties > video, look for the video option and take off auto and select dive. Otherwise, the video may hang during play or when done.