I've had this problem since the early versions of VLC, and I've finally decided to post about it.
When I use the transform filter some videos (WMV mostly, but a few Divx/Xvid here and there) get messed up like this:
The file play fine with the transformation filter turned off. Also, even with the transformation filter turned on, and the picture looking crazy like that, VLC still produces normal video snapshots.
Here's the info on one video that does it:
General
Format : Windows Media
File size : 397 MiB
Duration : 26mn 52s
Overall bit rate mode : Constant
Overall bit rate : 2 067 Kbps
Maximum Overall bit rate : 2 084 Kbps
Encoded date : UTC 2009-08-20 14:37:01.573
Video
ID : 2
Format : VC-1
Format profile : AP@L2
Codec ID : WVC1
Codec ID/Hint : Microsoft
Description of the codec : Windows Media Video 9 Advanced Profile
Duration : 26mn 50s
Bit rate mode : Constant
Bit rate : 2 000 Kbps
Width : 810 pixels
Height : 540 pixels
Display aspect ratio : 1.500
Frame rate : 29.970 fps
Resolution : 24 bits
Colorimetry : 4:2:0
Scan type : Progressive
Bits/(Pixel*Frame) : 0.153
Stream size : 384 MiB (97%)
Language : English (US)
Audio
ID : 1
Format : WMA2
Format profile : L1
Codec ID : 161
Codec ID/Info : Windows Media Audio 2
Description of the codec : Windows Media Audio 9.2 - 64 kbps, 44 kHz, stereo (A/V) 1-pass CBR
Duration : 26mn 52s
Bit rate mode : Constant
Bit rate : 64.0 Kbps
Channel(s) : 2 channels
Sampling rate : 44.1 KHz
Resolution : 16 bits
Stream size : 12.3 MiB (3%)
Language : English (US)