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VLC 2.0 Playback is Degraded

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llsee
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VLC 2.0 Playback is Degraded

I was attempting to watch an AVI video(codec 4cc: DX50) and the playback was very poor. It was a pretty dark video, and all of the dark areas were heavily pixilated. I thought it was just a bad video file. But then I tried playing it in Media Player Classic (ver 6.4.9.1) and the video looked pretty good. Out of curiosity, I installed the only other version of VLC Portable I had which is 1.1.11 and played the video, and it looked much better. Has anyone else noticed a degradation between VLC ver 1 and 2?