AFAIK that means libaacs.dll is there and working, but it can't see KEYDB.cfg.Blu-Ray error:
Your system AACS decoding library does not work. Missing keys?
Your input can't be opened:
VLC is unable to open the MRL 'bluray:///D:/'. Check the log for details.
Just to clarify, you can get to the %appdata% folder by typing in %appdata% into the Windows Start menu search (on Win7 anyway), or enter it into the Windows Explorer address bar and press Enter. In there make an "aacs" folder and put the KEYDB.cfg in that.
I've managed to get VLC playing certain titles (mostly without sound) but it's still quite buggy. If you manage to get a disc working, try specifying the title to play in the Open Media dialog box before pressing Play.
Also, from what I understand, if you inserted a disc that updates the drives MKB (and so hosts revocation list), then the KEYDB.cfg provided is not any use (newer keys are needed).
Arite.