Confirming that the OP is not the only one having this issue. I followed nearly the same process, encode with handbrake, use Subler to add meta data. I would add .srt files to the folder witht he movie (same name). Under the previous VLC it would display the subtitles in the window. Now it won't show the subtitles, additionally, egardless of whether I have "Show video within the main window" enabled, it shows two video windows. One actively has the movie, the other has a random shot from the movie and a progress bar. Closing either window closes the other window too.
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Update:
I just redownloaded the app through the website (previously I had let it auto-update, and at least initally it seems to be showing subtitles, but I'm still having the double video window issue.
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Second Update:
Subtitles displaying seems to be really intermittent. Sometimes they show, sometimes they don't
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Final Update:
I reverted to VLC 2.2.8 and everything works as expected; subtitles display and no double video window issue
I've followed all the above and reverted back to VLC 2.2.8 but I'm still seeing the double window and no subtitles when adding them to the player (from the same folder and also .srt) ..... so annoying. Does this mean this has something to do with my MAC OS and not VLC itself?