I also have a backup copy of the vlcrc settings file - I made that when all my settings were "fine" in order to revert to those settings when something starting to work strangely. By the way would be fine it that was an option in the program - so that on top of "restore defaults" also to have the option of restoring "your preferred settings".
Guess what? I installed 0.9.8a again and recovered my unique interface with all video and controls in the same window
Edit: Sorry I realize this post that I found using "Search" is the Linux and friends Troubleshooting - I'm Windows Vista user so my comment might not have any value here.
