… plus file coding being H264 - MPEG-4 AVC (part 10) (avc1) does not describe a codec problem.
Rather I wonder if you tweaked VLC preferences in a way that crippled something, or if your system has a bottleneck or memory constraint somewhere.
Things to try:
- reset VLC preferences
- disable HW decoding (counter-intuitive, but might work)
- check another video output module
- increase caching to 1000-2000 ms
(but the list gets tricky after the first two lines…)