After playing around for a bit, this is what I needed to do:
#1 Preferences>video>subtitles/OSD First, I unchecked Autodetect subtitle files. Second, I browsed to library>fonts>yoncon.ttf (that's the korean font file I think I downloaded it myself a while ago..not sure where from though)
#2 Preferences>video>subtitles/OSD>>Text renderer, again, I browsed to the same font file
#3 Preferences>Input/Codecs>Other codecs >>Subtitles>>>Subtitles text encoding>>>>CP949
#4 When opening the .avi file, VLC>File>>Open File>>>browse for your .avi file
#5 When opening the subtitle file, VLC>File>>Open File>>>check Load Subtitles File>>>>Settings>>>>>Browse for your subtitle file (mine are usually .smi)>>>>>>Subtitles encoding>>>>>>Cp949
If you're in need of this info and having difficulties with my instructions, send me a pvt message and I will send you my screengrabs. Good luck!!