So I was playing a game and I dealt my opponent the damage card that makes your pilot skill 0 for the rest of the game. He had veteran instincts on that pilot which makes your pilot skill 2+ I thought that the veteran instincts would already be included and there for his ship would be 0, but he said that it would be 0 plus two. It was just a casual game so we rolled for it and I lost and we played on with his ship at PS 2, no big deal. But who was right? Any ideas?

You were correct. The crit trumps VI.

Damaged Cockpit: After the round in which you receive this card, treat your pilot skill value as "0"

I know this came up before. I believe that because damaged cockpit states to "treat" your PS as 0 and not reduce your pilot skill to 0 that the VI modification is applied and then reduced to 0, in effect the damaged cockpit is overiding the VI +2.

Thanks for the info guys. I thought I was right.

In the FAQ directly:

Q: How does Veteran Instincts work with other abilities that set a ship’s pilot skill value to a new number?
A: Veteran Instincts increases a ship’s printed pilot skill value; it does not increase further alterations to that ship’s pilot skill value. For example, while Black Squadron Pilot is equipped with Veteran Instincts, his pilot skill value is “6.” If Darth Vader (pilot skill value “9”) uses Swarm Tactics on that Black Squadron Pilot, that Black Squadron Pilot now has a pilot skill value of “9,” not “11.”

Same applies to any ability that sets the PS value.