What OS are you using? (As I saw your log, you were using Windows.)
Can you try the following:
- enable/disable hardware decoding? (setting -> all -> Input/Codec -> Video codec -> FFmpeg)
- change threads number from 0 to 1 or 1 to 0? (setting -> all -> Input/Codec -> Video codec -> FFmpeg)
- change video output from default (Direct3d) to another?
On my Windows 7 64bit environment (Video Card: Radeon 5870 Catalyst 12.1 Preview):
- If I enabled hardware decoding, I saw many block as you said.
- If I disabled hardware decoding, I didn't see block, playback was fine.
Maybe this issue is realated to the ticket (at least for me) :
http://trac.videolan.org/vlc/ticket/5676
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