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http://steamcommunity.com/discussions/forum/1/882959527729735798/
From this search...
http://steamcommunity.com/discussions/forum/search/?gidforum=882959061466924237&include_deleted=1&q=%22VLC%22
See if the experiences of others with VLC and Steam can help you also.
Restart your computer into safe mode with networking. Log into your Steam client and then launch VLC and listen to some music and see if the issue presents itself there.
Are you sure all your device drivers are up to date from the official manufacturer only and not by using Windows update instead ?
EDIT....I can see you said they are up to date, but how did you get them up to date ?
Manually search for device driver updates for all of your devices in the computer. If you find new ones, download them and install them first before this safe boot test.
I use Driver Robot to update my drivers except for the Nvidia stuff. I have the Realtek Audio Driver and Intel R Display Driver on this laptop. I went into control panel and it says all the audio drivers are all up to date.
I would not be using that for drivers. Just go to the website of the official manufacturer please, and search for your computer and check if they are up to date yourself. Don't trust third party software to do that correctly or fully.
Post screenshots of all of your installed programs.
You seem to have ignored what I suggested about the safe boot option.
I cant run the games in safe mode which is when the problem occurs. VLC works fine with Steam open, its as soon as a game is started.
Sorry about that, as that must have been my mistake.
All I can suggest is driver updates as I have outlined, screenshots of your programs (there may still be a conflict somewhere), or searching the threads I linked to you.
If you have k-lite codec pack for example only, that can be a possibility.