How to Use madVR with VLC
You can't use madVR with VLC Media Player because VLC is terrible. The best way to optimize VLC MediaPlayer is to uninstall it, and then install PotPlayer, or MPC-HC, both of which provide good quality and support madVR.
I have no idea why VLC doesn't support madVR, I really don't. What I do know is that VLC provides the worst video quality possible, at least compared to PotPlayer or MPC-HC. To be fair, all video players will provide bad quality without using madVR, but the fact that VLC doesn't support a decent video renderer surprises me.
If you want high quality video you should never use VLC, in fact you should never suggest VLC to anyone.