I'm using Windows 7 Pro SP1 64-bit. I was using v1.1.10 and just upgraded.
VLC would flash open and then go straight to taskbar. If you tried to play something it wouldn't appear on desktop but you could hover over it and the windows Aero view would showing it playing. It didn't matter if I used skin mode or not.
I then uninstalled and reinstalled with same problem. I had to uninstall using the delete cache and settings option and then reinstall to get it to work.
After tweaking some of the settings, now a DOS window flashes in upper left corner and no sign of VLC anywhere. In fact, it doesn't even show up in Add/remove programs, but it is on Programs menu.