Firstly, this is not a very good query to start with. The LIKE on the on-clause is going to be used before thread.forumid, because title occurs less frequently than a particular forumid. And since it's case insensitive, it's going to be slow. This is something we can try to improve.
However, the collation is not something that was defined by this mod. It's possible that your original install of vBulletin was on a different server, or used a different default collation setting than your database has now.
Please check your database's settings to make sure the default collation matches your vBulletin table collations. If you have any additional tables that use the incorrect collation, you will need to change each of them manually. Additionally, you will need to change the improper collation of their existing columns manually. Overall, this should improve the performance of your site.