Missing insert “Video from Web Site” option in PowerPoint 2010 may caused by recent windows update KB2553145.
Try removing KB2553145 from the installed updates published on 9/10/2013. I saw it on the list twice and removed both. After that you will be able to insert video from the web in PowerPoint 2010 x64 and x86 again.
Another way to insert video is to enable Developer Tools
First, modify the ribbon to add the Developer tab.Open a presentation and click the File tab. Click on Options, then Customize Ribbon. Place a check next to Developer in the main tabs box, and then return to normal view. You will now have a DEVELOPER tab on the ribbon.
Copy that URL, then right click the X in the rectangle you have drawn for the Shockwave Flash Object. Select Property Sheet from the context menu.
In the resulting Properties dialog, click in the blank field next to Movie, and paste in the URL from the YouTube address bar.
Do not use the Share URL, but get the URL from the address bar and make sure to remove extra bit like watch?= etc.
To see the video play you will have to go to slide show view
Flash player must be installed on pc.