i just tried latest vlc 1.2.0 (vlc-1.2.0-git-20110430-0003-win32)
dvd playback from harddisk is broken but i found a way to fix it
with open disc
i see my dvd drives in "disc device"
e:\ and f:\
when i select one of them
mrl field will change to
dvd:///E:\
or
dvd:///F:\
and dvds work
but when i select a dvd folder on my harddisk for e.g. d:\dvd\ or d:\dvd\VIDEO_TS with browse
the mrl field will NOT change to drive d:\
and i get an error message when i want to play a dvd from harddisk because vlc still looks at drive e: for a dvd
seems there is a small bug in vlc that mrl field is not changing after selecting a harddisc folder
but i found a way to fix it
after i open vlc and go to open disc i have to write my hardisk drive letter manually in the field "disc device"
d:\
after that mrl will change to
dvd:///D:\
and now i can select (browse to) any folder on my harddisc to play a dvd
hope this little info helps