In 0.8.5 the player is resized to the video rather than in prior versions where the video was sized to the player. For some users depending on the hardware this is a problem. You can revert to the way prior versions did this by going to preferences, Video and scroll down to Window properties. Then enter 781 for video width and 331 for video height, then press Save and restart the player.
No--this only happens when launching another movie from inside the already-running player. I previously had resized the player, sometimes the new video is resized without considering the time slider. When I posted the OP I thought it was all the time but since then I've found it sometimes happens, sometimes doesn't and I haven't figured out the trigger.
It's obviously errantly figuring the size of the useable area for the player in this case. I wouldn't be shocked to learn that the variable behavior is a timing issue--maybe the time slider hasn't been drawn yet when the useable area is being calculated. (While I haven't looked at the VLC source I've been programming for 30 years, making a living at it for 20.)