The VideoLAN Forums

If you press "d" on the keyboard, the deinterlace method you choose will be enabled but there should be a menu option for this as well.

Using the 1.0 nightlies and getting great performance now. No freezes and fast seeking in all formats so far. 1.0 looks very promising:
http://nightlies.videolan.org/

I just tried that, but the frame-freeze still happens.

After some further testing, I notice H.264 videos still freeze some but xvid and divx don't freeze anymore. I wonder if it's a codec problem then.

I've had this problem when seeking video files. I did have the problem prior to 0.9 but it was very rare, now the problem happens quite a bit. I'm using VLC 0.9.8 on a intel Mac Mini. I believe I may have fixed the problem though, at least for myself. Go to preferences, change to advance Input/Codes...