There are programs available to download You Tube content but this method is for playing it within PowerPoint with a live internet connection.
First open a new PowerPoint. You now need to see the Control Toolbox. In 2007 you will need to enable the Developer TAB to do this. Office button > PowerPoint Options and then in Popular "Enable Developer Tab" In earlier versions use View > Toolbars > Control Toolbox.
You should now check that in PPT 2007 macro security is set to "disable with notification" and in earlier versions to "medium". You must save the file as a *.pptm or *.ppsm macro enabled file if you are using 2007.
Either way click on the more controls tool which looks like a hammer and spanner.
Now scroll down and find "Shockwave Flash Object"
On your slide drag to make the control fill the area you would like the You Tube Video to play in.
You will need to know the URL of the Video. You can find this on You Tube (you may need to click "more info"). Copy the URL.
Now RIGHT click and got to "Properties", choose "Custom" and paste in the URL from You Tube. Embed Video should be unticked.
The bad news is it doesn't work!. You will need to change the URL format so that PowerPoint can read it. Study the URL and delete the part that says watch? (nothing else) and then change the = sign to a /
You're ready to go. Make sure that you have a live web connection and play the PowerPoint!