I use VLC media player 1.1.11. When I try to watch video on the internet using VLC (XSPF files) it freeze for buffering every couple of seconds because the download speed is lower than the bitrate of the file. When I use WMP12 (M3U/WPL files) to play the same video the streaming is much better. When I watch the video on site using Flash FlowPlayer it streams smoothly and downloads on max speed (buffer size is unlimited). I've a fast connection which is much higher from the bitrate of most of the files, so it's not the issue.
I tried changing VLC preferences but it didn't help.