removing VLC settings does reset the full-screen controller position. The position value is stored to %appdata%\vlc\vlc-qt-interface.ini
Odd. It didn't during 2 reinstalls (and one downgrade because of 0.9.8a's multi-display issues). It also hasn't returned having manually edited then manually wiped the settings files from my user profile and made sure the relevant options are turned on in the player preferences. Something else is going on, evidently.
edit:
Reinstalled 0.9.6 again, verified that all settings actually were erased after preceeding uninstall; the same thing happens. It appears as though the default position of some dialogues [including the extended settings] is off-screen. The only difference between my setup now and how if was before is that my primary display is 16:10 aspect and of a lower resolution [1440*900 now where with the CRT I was running 1600*1200]. I only know this because the default position of the extended settings dialogue was such that its very top edge was visible at the bottom of the display.
Am reminded of another unrelated issue, as well: I leave VLC to install and associate itself with basically everything, to make sure it takes over handling of things that other software [such as quicktime] hijacks. Upon finishing the install, many of the file type associations involved suddenly have default permissions removed in the Windows registry, so even System and Admins can't alter the settings [without opening regedit and resetting the permissions].
This obviously no longer belongs under feature requests, so perhaps this could be moved to bug reports? The same dialogue position issues affect 0.9.8a on my machine [under WinXP SP3] as well.