LOL, that's funny! Not just the fact that it says malfunction, but the fact that it cant play VCD. I have a very early dvd player and even it can play (s)vcd. Players have been able to play vcd before dvd players were even released
But to answer that question.. I dont see how it would do any damage to the player, if the player is just unable to read vcd then it would probably react to the disk the same as it would a severely scratched disk, and give a read error.