VLC media player forum provides a solution for this problem, that’s to copy an updated youtube.lua file to /VideoLAN/VLC/lua/playlist/. However, this doesn’t solve the problem any more in March 2018.
If you get the error message containing word “MRL”, the true solution is to change configurations of Windows firewall.
In case of Windows 7/10, go to advanced settings of Windows firewall and change both of Inbound rules and Outbound rules of all “VLC media player” profiles into “Enabled=Yes” and “Action=Allow”. This means every profile of VLC media player will be turned into green.