Hello Janet,
I think this is how you do it:
1. Go to User CP.
2. Scroll down the page until you get to the heading Miscellaneous Options.
3. Look for the drop-down list labelled Message Editor Interface.
4. From the list, select Enhanced Interface--Full WYSIWYG Editing.
5. Save your new settings.
When I set my options that way, I was able to embed YouTube videos directly.
Hope this helps,
Trinity