Hi.
VLC exhibits some odd problems when playing video files that have an odd size (e.g., 320x239) in some codecs.
With the DirectX output module, it overlays a centered vertical band of flickering yellow and purple garbage on top of the video. I don't think it's decoding wrong, because the garbage is unmoved by some filters (e.g., the waves effect). It annoyed me for a very long time until I discovered that it was unique to the DirectX output mode. But if I switch to OpenGL or plain Windows GDI output, it doesn't draw the garbage but instead puts a bright green line at the bottom of the video.
With all output modules (and I assume other OS's), there are other problems. Resizing the window while the video plays can cause it to suddenly go all white then stop playing. Turning on the rotate filter causes VLC to immediately crash.
I'm fairly sure I've seen some odd-sized videos in some codecs that work fine. I know I've observed this bug with at least FLV1, VP6F, and MP4V (as reported by VLC's codec information window). It's been happening for as many VLC versions as I can remember (I'm using 0.9.9 presently).