I found a solution in the askubuntu forum that works for me. http://askubuntu.com/questions/736923/vlc-not-displaying-video-properly-in-fullscreen#
In short: Tools > Preferences > Video > Output change to "OpenGL GLX video output(XCB), save and restart vlc.
This fixed both the blue screen and the occlusion for me!
I found a solution in the askubuntu forum that works for me. http:// askubuntu. com/questions/ 736923/ vlc-not- displaying- video-properly- in-fullscreen#
In short:
Tools > Preferences > Video > Output change to "OpenGL GLX video output(XCB), save and restart vlc.
This fixed both the blue screen and the occlusion for me!