The newest VLC is back to it's original form. My preferred player over KMP for now. As for codecs i would recommend updating each individually. Codec packs wreck havoc sometimes.
Since long, i've been using Xvid+AC3+Ogg+CoreAVC...
And it runs everything on my PC using Windows Media Player itself...
And if i get something from the net which is like a t file or something, i just play it using KM Player...
Codec Packs mess up with the registry sometimes and they are difficult to remove that easily...Though for playing non-HD content i think codec packs are just enuf....