I didn't update everything, afraid of bloating the harddisk

. "uname -r" returns "2.6.33.7-pclos6.bfs".
Prior this installation, once I installed & upgraded the kernel to 2.6.38.8, but it caused the system couldn't be entered after reboot. So I reinstalled & didn't intend to upgrade the kernel again

, but fglrx.
Not sure if you were aware at the time but on first boot of a new kernel it has to build a few device drivers and can take a few minutes before it gets to the desktop. This has been documented in the software announcements area. Also you still have your previous kernel in place in the event there is some kind of problem with the new kernel so re-installation was not required.
For VLC there is a preference tab in the menu and you can select video and try different playback libraries until you achieve the results you desire. X11 seems to work well for me though you might need a different one.
I cannot speak for Totem as the developers have pretty much ruined it for me so don't use it because of its limited ability to playback various formats.