First grab the URL of the YouTube video page.
Now click on Media –>Open Network stream.
Paste the URL and click Play.
Once VLC starts streaming the video,
click Tools –>Codec Information and at the bottom of the window you will see a Location box.
Copy the URL and paste it on your browser’s address bar.
The browser will now download the file which you can save it to your hard disk. Alternatively, you can record the video.