[abdulbasitsaeed]

It actually does work with 4.0.4 too. The new and old templates don't match, and hence you need to revert to the default template. If you have already done that during the upgrade to 4.0.4,

Go to Styles & Templates ?> Style Manager ?> ?> BBCode Layout Templates ?> bbcode_video:

Find:

<object class="restrain" type="application/x-shockwave-flash" width="640" height="385" data="http://www.youtube.com/v/{vb:raw code}">
    <param name="movie" value="http://www.youtube.com/v/{vb:raw code}" />
    <param name="wmode" value="transparent" />
    <!--[if IE 6]>
    <embed width="640" height="385" type="application/x-shockwave-flash" src="http://www.youtube.com/v/{vb:raw code}" />
    <![endif]--></object>

and replace it with:

<object class="restrain" type="application/x-shockwave-flash" width="640" height="385" data="http://www.youtube.com/v/{vb:raw code}&fs=1">
    <param name="movie" value="http://www.youtube.com/v/{vb:raw code}" />
    <param name="wmode" value="transparent" />
    <param name="allowFullScreen" value="true" />
    <!--[if IE 6]>
    <embed width="640" height="385" type="application/x-shockwave-flash" src="http://www.youtube.com/v/{vb:raw code}" />
    <![endif]--></object>

Hope this works for you.