I have just been playing around with Windows Media Player 11 which was released today and I can report that it is an improvement. The UI is much better and it has support for external subtitling files. So if you play a video file with subtitles, but subtitles that the author of the video has thoughtfully provided in a separate subtitle file, WMP11 will now play those subtitles with the film. I cannot find the option for this in WMP11, but when the subtitle file is moved to a separate folder WMP11 does not play them.
Because I cannot find any options for subtitles I do not know how WMP11 will handle video files with multiple sets of subtitles or files with multiple audio streams. And that being said WMP11 refuses to play any OGM or MKV files so I cannot even see how it will handle video files with multiple audio streams. But that being said WMP10 didn't support any of this so even a little improvement in the right direction is good.