Thanks for the recommendation. I deleted the preference files and folders, restarted and had the same problem. I then uninstalled VLC, including the preferences you mentioned above plus any other that had videolan in name. I installed VLC again. Now I get the same message as before but some of the files play. It's not format dependent. Some Video-TS folders will play after getting the message others won't.
Any other suggestions?
Thanks again,
Bob