Two suggestions for programs that might help you.
1) DVR2MPG: very simple, free tool to "convert" .dvr-ms files to mpg. As I understand it, .dvr-ms is natively mpeg2 with ac3 audio, but it's packaged differently (maybe as a "stream?"...I probably sound stupid...maybe somebody smart can clarify). This tool just re-packages quickly into a more "regular" file. With my HD tuner, I record video at roughly 8GB/hour...this tool will convert an hour of hd video in a matter of a couple minutes or less.
2)DVR-MS Editor: another very simple tool for editing .dvr-ms files. So, you can edit them in this, input them into DVR2MPG, and have regular old MPEG2 files that'll look beautiful in VLC.
I found both of these pieces of software through here:
http://watchhdtv.net/download.aspx
Just scroll to the bottom and you'll see the links. I think you need to have Microsoft.NET framework 1.0 and/or 2.0 installed for DVR-MS Editor to work.
One more note: when you click the link for DVR-MS Editor, the page looks all complicated...but if you're like me and don't know anything about stuff, don't get discouraged. Just download "dvr-ms sample code.msi", run it, and find the DVR-MS Editor within the folder "...\DVR-MS Sample Code\Applications"