1- For 2007 ppt, make sure you have the 'developer tab' enabled. If it isn't, click on the office button, scroll down and at the bottom, click on 'power point options' which will open up another window where you have to put a check mark in the 'show developer tab in ribbon' box. Once that is done, navigate to the slide where you want the video to be and from the developer tab, click on the icon of a hammer and wrench in the controls tab. This will open up another window where you will scroll down to 'shockwave flash object' to select that and click OK. Navigate back to the slide and left click on it anywhere. This will insert the frame in which the YouTube video will play, but first you have to right click, go to 'properties' and from there, copy paste the url of the video you want into the field 'movie'. Easy enough. Now, remove the watch?v= and replace it with v/. You are almost done. On that same properties page, click on 'loop' and look over to the far right where you should see a tiny drop down menu. Change the 'true' value to 'false' by clicking on the small arrow and selecting 'false'. Do the same for 'playing'. Now close that window, go back to your slide and check to make sure the video will play by clicking on the full screen icon on the bottom right.
The other option is to navigate to http://skp.mvps.org/youtube.htm and follow his excellent instructions for how to have a permanent add on button on your power point ribbon.
You can look at this video to see how.