I also am unable to embed a Youtube file but can embed a vimeo file.
When I put this link in a post, just the text appears:
https://www.youtube.com/watch?v=GmfE5KPnYjw
When I put this vimeo link, the video appears in the post.
https://vimeo.com/27808714
I am using the latest version of WordPress 3.2.1
Mac OSX 10.6.8
