How should I fix the following VLC problem? It shows distorted bottom half of the video

I currently have strange issue with video playback using VLC 3.0.8 from official Ubuntu 18.04 LTS repository.

VLC shows gray or distorted bottom half of the video as shown below:

on all full length. The top half is not static, it updates well, but maybe stretched.

This laptop is Asustek UX32A, it has only Intel iGPU with the following details:

$ uname -a
Linux user-UX32A 4.15.0-147-generic #151-Ubuntu SMP Fri Jun 18 19:21:19 UTC 2021 x86_64 x86_64 x86_64 GNU/Linux

$ lsmod | grep drm
drm_kms_helper        172032  1 i915
syscopyarea            16384  1 drm_kms_helper
sysfillrect            16384  1 drm_kms_helper
sysimgblt              16384  1 drm_kms_helper
fb_sys_fops            16384  1 drm_kms_helper
drm                   401408  9 drm_kms_helper,i915

$ lspci -k | grep VGA -A3
00:02.0 VGA compatible controller: Intel Corporation 3rd Gen Core processor Graphics Controller (rev 09)
    Subsystem: ASUSTeK Computer Inc. 3rd Gen Core processor Graphics Controller
    Kernel driver in use: i915
    Kernel modules: i915
$ vainfo 
libva info: VA-API version 1.1.0
libva info: va_getDriverName() returns 0
libva info: Trying to open /usr/lib/x86_64-linux-gnu/dri/i965_drv_video.so
libva info: Found init function __vaDriverInit_1_1
libva info: va_openDriver() returns 0
vainfo: VA-API version: 1.1 (libva 2.1.0)
vainfo: Driver version: Intel i965 driver for Intel(R) Ivybridge Mobile - 2.1.0
vainfo: Supported profile and entrypoints
      VAProfileMPEG2Simple            : VAEntrypointVLD
      VAProfileMPEG2Simple            : VAEntrypointEncSlice
      VAProfileMPEG2Main              : VAEntrypointVLD
      VAProfileMPEG2Main              : VAEntrypointEncSlice
      VAProfileH264ConstrainedBaseline: VAEntrypointVLD
      VAProfileH264ConstrainedBaseline: VAEntrypointEncSlice
      VAProfileH264Main               : VAEntrypointVLD
      VAProfileH264Main               : VAEntrypointEncSlice
      VAProfileH264High               : VAEntrypointVLD
      VAProfileH264High               : VAEntrypointEncSlice
      VAProfileH264StereoHigh         : VAEntrypointVLD
      VAProfileVC1Simple              : VAEntrypointVLD
      VAProfileVC1Main                : VAEntrypointVLD
      VAProfileVC1Advanced            : VAEntrypointVLD
      VAProfileNone                   : VAEntrypointVideoProc
      VAProfileJPEGBaseline           : VAEntrypointVLD

HWE is not enabled.

Log for vlc --verbose=2 video.mp4 is uploaded to https://pastebin.com/S2Qd4Gsd . Removing VLC dot-folders does not fix the issue.

What is really strange that this file plays well on the other laptop with Nvidia and the same VLC version. It plays also well using Xine and MPlayer on both laptops.
The file itself is not corrupted, it has same MD5/SHA256 on both laptops.

How should I fix this video playback problem?

TL;DR

Run sudo rm /etc/X11/xorg.conf.d/20-intel.conf to resolve the issue, then reboot and login back to the system.

Details

After some analysis I have discovered the following.

My laptop has initially Ubuntu 12.04 LTS installed, where I tried to get the all resources of my iGPU, so I have added the /etc/X11/xorg.conf.d/20-intel.conf with the following contents

Section "Device"
  Identifier  "Intel Graphics"
  Driver      "intel"
  Option      "AccelMethod"  "uxa"
EndSection

On modern system this file is not needed and causes the above strange problem with VLC. So this file should be removed.