If you get this, be careful where you download it from. Codecs are often laced with all sorts of nasties (virii, malware, etc). Just be careful.http://en.wikipedia.org/wiki/DirectVobSub
for more info.
I actually have VLC and your right it's a great program. I was thinking more for when I'm at home on my xbox and wanted to use my Media Center to watch whatever i have on my computer without actually going into the other room to turn on the subtitles.
I have DirectVobSub once before on my XP computer. I'll have to search around for a good place that's safe and check the files.