My favorite VCD player is PresentMovie. It works in conjunction with QT, and allows true full-screen display. It's also free. It will play anything that QT supports.
As for making VCDs in Windows, you can't do better than EazyVCD. Not only is it free, but it is essentially a one-click app. It assumes that you are starting with a DVD, and generates bin/cue files that are ready to burn. If Nero gives you trouble (as it often does), you can use burnatonce (again, free) to burn the bin/cue files.