You should be able to view a YouTube video in VLC - just copy and paste a YouTube URL into VLC (go to "Media >> Open Network Stream...", paste the address in the "Address" text box and press "Play"). You could then stream that to a file etc.
However, if you juat want to save a video use a website such as KeepVid.
I am using StreamTransport ( http://www.streamtransport.com ) to download the video from Youtube, it is a freeware, you can have a try! Thanks and good luck for you!