Resists and vulns. Do they stack, or cancel one or the other out?

I've always believed they stack (i.e. assuming vuln is 125% damage, and resist 67% damage, the result is 84% total damage) but certain individuals keep claiming a resist cancels out a vuln completely. That frankly doesn't make any sense, by what reasoning is a resistance "stronger" than a vulnerability, so that it would completely cover it up?

Vulns do stack, anyway, you can see that easily (and I think using a metal+elemental weapon against a druid would be a bad idea, though I've no test data on that).

Uh, and to keep it in the line along the conspiracy theme: whichever is the true answer, one of you imms obviously coded it to take advantage of a secret item hidden in a nameless container on the eastern road that grants you resistance to X.