When you click the 'YouTube' button on the post toolbar, you only need to paste the string of characters that come after the equal sign (=) in the YouTube link, and not the full URL. If you click the preview post button, you should see then see the video.
it seems my youtube is not working either. i hit the embed button on youtube.com and then click the youtube icon and paste but it is not working. am i doing it wrong ?
Do not use the embed button any more. you need to place the video id between the youtube bb code like so [YOUTUBE]xSeh2uoc18c[/YOUTUBE] quote my message to see the bb code.