AC asks "So XBMC is better than VLC?"
Well, maybe, but it's not quite a fair comparison. XBMC I use in its original incarnation, on a softmodded xbox to stream content off my main server. VLC I've used as a desktop video client, but I got increasingly frustrated with it: it would have problems rendering video occasionally: failing to show anything, but stopping and restarting the video would fix it. It also seemed very slow to seek. So I've gone back to my previous desktop solution: MediaPlayerClassic, plus ffdshow and possibly another codec pack or two ("Windows essential codec pack" seems to do the job, and is not obviously full of adware crap).
Well, you did ask.