Embedding a YouTube video into your blog isn’t difficult to do, but I find the instructions from the WordPress support forum to be difficult to follow. It’s really not that hard. There are two ways to do it:
Using the “upload / insert”, choose “from URL”. Then choose “Audio, Video, or Other File” and copy in the link to the YouTube. That’s how I did this one below, which came from one of my very favorite bloggers, Chronicles of a Country Girl. Unfortunately, it directs you to YouTube, most likely due to a copyright restriction on the music used. I don’t know that there is a solution to this and it’s something to keep in mind when embedding YouTube videos.
This YouTube video was done exactly the same way, but will play on this post:
You can also type it in manually. Partway down this page, timethief shows how the coding should look with the brackets. If the hyperlink is active, you must break the link (using the broken chain symbol at the top of your writing area) or the embed will not work.
I did the below YouTube link manually.
Here is some extra help. The first arrow pointing left is where a picture is uploaded into your post. The arrow pointing down shows to put in and break a hyperlink. The bottom arrow pointing to the right shows how the link looks if you do it manually. You can also see how the manual link looks by clicking here.
Easy peasy – I hope. We’ll see how it looks when it publishes.
A Daily Life 
February 28, 2012 at 11:25 am
Actually, providing you’ve enabled auto-embeds in your settings (Dashboard – Settings – Media and check the ‘Enable auto-embeds’ box (which is followed by the words: ‘When possible, embed the media content from a URL directly onto the page. For example: links to Flickr and YouTube.’) Then you can just copy the Share code from YouTube and paste it into the visual editor and it should appear fine. Alternatively, use a shortcode in visual or HTML editor:
http://en.support.wordpress.com/videos/youtube/
What you do need to make sure of, though, is that you leave plenty of space between each youtube URL or shortcode, by pressing your enter or return key a couple of times.
There’s no need at all to use the media button in the post editor page at all. :)