WMP and VLC use different techniques to replay files.
VLC has all the codecs required for the files it plays incorporated in the application - so when you install VLC you get support for all the files it plays.
WMP is different, in that in a default Windows installation it only has relatively limited support for various codecs (and it is important to remember that AVI isn't a codec itself, it is a wrapper for all sorts of different codecs), and for WMP to replay a wide range of codecs you have to install a whole bunch of codecs separately, otherwise you get audio but not video.
HOWEVER - streaming to the PS3 using WMP is not the same as replaying on the PC using WMP - as within WMP the file is just "served" to the PS3, not replayed and converted on the PC.
AIUI VLC doesn't currently support the UPnp/DLNA streaming that the PS3 supports, as they operate quite a bit differently. (The PS3 expects to be able to chose a file FROM a list and then stream it, VLC expects to stream a single file chosen on the PC TO a destination?) However if VLC could be persuaded to work in a compatible manner, and the PC had enough grunt to transcode to MPEG2 or H264 in real-time it would be a solution - just as MediaHome and TVersity are...