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Let the Manufacturer Repair the Machine. This is probably the most page easy way to begin getting the PS3. Sony includes a team of technicians that do so around the clock nothing but fix my website PS3s. If you package your unit up and send it back to Sony it will go to this repair center.
Alternatively if VLC doesn't work for you, on Windows I recommend Videora iPod converter. It's got a very clean user interface, and works just as well. In my tests however, it performed significantly slower than VLC. It also offers quite a bit less options with regards to output format. Also it should be noted that if your video is broken in any way, whereas VLC will attempt to fix it for you, Videora has no such ability.
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