Start/Settings/Control Panel/Add-Remove Programs/Add-Remove Windows Components/Un-Check 'Windows Media Player' to remove WMP. Play a DVD now and it will need to know what to play it with, select VLC.
Go back and re-check 'Windows Media Player' to re-install WMP and see if it either plays DVD's properly or not at all (automatically).
Open DVD in Windows Explorer,
Go to VIDEO_TS folder, right-click on VIDEO_TS.IFO and select "Open With" and select VLC.