OK, well first that command line is needed in order for the new pause feature to work correctly, so you likely can not use that feature. You seem very keen to be able to update Launchbox, but dont seem to have that same passion for MAME, why is that? The MAME emulation has come a long way. Also that new command line will work on versions of MAME going back over three years, so yes you have a very old set.
Those two errors are because you downgraded your version of Launchbox, without first posting your issue here, this whole issue could of been solved very quickly and without errors, but anyway. Those are VLC errors because VLC was updated recently and you downgraded to a older Launchbox version that needs the older version of VLC. Simply close Launchbox and delete the VLC folder inside the Launchbox folder, Launchbox will re-create that VLC folder on next launch.