I have experimented on my old Vista system since my last post. In my case, double-clicking an optical drive in Computer as you describe opens an audio CD in Windows Media Player 11. I believe I could change that to iTunes via Control Panel > Default Programs > Set program access and computer defaults. However, VLC (I have 2.2.4 installed) does not appear as an option for "Choose a default media player" there for some reason, perhaps an option that I did not select upon installation. I have looked at https://wiki.videolan.org/VLC_HowTo/Make_VLC_the_default_player/ but that seems to be concerned more with file associations. Regarding your error message, I now suspect that your default media player was uninstalled.
Anyway, if you would like audio CDs to launch automatically in VLC without opening Computer and right-clicking the optical drive, you should certainly be able to do that via AutoPlay settings (at least I can).