After searching everywhere for a solution I finally found one. I checked the forum here and the only info I found was to reinstall the codecs from packman, which I did. That didn’t help. If the following solution is already here, I didn’t find it. Also I tried playing videos in IceWM and had no problems. So I knew it was something either KDE4 or Compiz specific. Turns out it was Compiz.
So I finally found something online. If the red flashes, black screen, etc happens try and change the video codecs. I did this with Kaffeine as well as VLC.
In Kaffeine go to settings>xine engine parameters>video and change the driver to be used to “xshm” under the beginner options tab.
In VLC go to tools>preferences>video and change the video output option to “x11 video output”
This worked great for me. If those don’t work out right try different ones until it does work.