I was having the same problem. At first, I thought the problem was specific to Vista/IE7 because the only machine I had with that configuration had any such issues. The information on this thread was very helpful in tracking down the real source of the problem.
I started having the problem with .asx, .mpeg and .mpg files shortly after I installed VLC (to view .ogg files), but since I didn't discover the problem until a few days after installing VLC I didn't even think that VLC was the issue. I tried all kinds of things to fix the problem - reassociating file types, installing WMP and various codecs again, etc - but none of that worked.
Sven's post about his Registry fix combined with Kulltogi's post about removing VLC helped me find a solution. Kulltogi was very close, but you don't have to actually uninstall any software to restore the associations. For each file type that VLC supports, it associates itself with the extension in the Registry. Fortunately, it creates a backup of the previously associated program for that file extension. When I went to the Registry keys that Sven pointed out I noticed that the data in the (Default) value was "VLC.xxx" (where .xxx is the file extension in question) even though I had associated said file type with another program in both the Default Programs 'Set Default Programs' and 'Set Associations' utilities. So, I changed the (Default) value for each file extension I was having problems with to match the program I wanted associated. This wasn't too tough because, as I said, VLC made a backup value called "VLC.backup" that contained the data I needed. After about 6 or 7 Registry searches for file extensions and a few copy and pastes... it all works now. I still have VLC installed, and I still have my associations working as desired.
The real problem, as I see it, is that Vista didn't override the file type association correctly. You'd think that after a reinstall of WMP and multiple attempts at associating file types with WMP manually Vista would change the Registry to match. I'm not sure what's going on there, and I don't have time to investigate, but I think it's a real problem.
I hope this helps someone else that is as frustrated as I was...
For those interested, details of the system used in this description follows:
- Intel Core 2 Duo @ 1.80 GHz
- 3.00 GB of RAM
- Windows Vista Business 32-bit SP1
- IE 7.0.6001.18000 Update Versions: 0; 3283;
- Windows Media Player 11.0.6001.7000
- VLC media player 0.8.6d (exWidgets interface)