I just ran into this same problem, and even after trying your solution, it wasn't working. I finally figured out what was wrong and got it working, hope this helps others in my situation.
You just have to paste the URL from youtube into your post and the forum will automatically turn it into an embedded video for you BUT you have to make sure the link you paste is not secure. Youtube kept giving me a secure link (with https:// at the front), and it would only show up as a link, not an embedded video. All I had to do was delete the "s" (so all I had at the front of the link was http://) and it magically worked. So if you're in the same boat, try that out and see if that works for you.