Hi, Bob.
See this Adobe TechNote for the real reason we can't run Flash in 64-bit
IE8 (and other 64-bit browsers):
http://kb2.adobe.com/cps/837/cpsid_83715.html
The key line there is:
"Adobe Flash Player is not supported for playback in 64-bit browsers.
Flash Player will, however, run in a 32-bit browser, running on a 64-bit
operating system."
So it is not Win7 that is the problem; it is not 64-bit per se (many
(most?) other products now run fine in 64-bit Win7. But Adobe Flash is
still stuck in the 20th Century, it seems. ;<)
Our solution, for now, as others have said, is to run 32-bit IE8, which
is included in Win7, as well as 64-bit IE8. You'll find the two
versions here:
32-bit IE8: C:\Program Files (x86)\Internet Explorer\iexplore.exe
64-bit IE8: C:\Program Files\Internet Explorer\iexplore.exe
The 32-bit version runs by default, but your Win7 may have been edited
(intentionally or otherwise, by you or someone else) to default to the
64-bit version.
I've changed my default to 64-bit IE8 (I don't know why) and often find
myself looking at a YouTube or other page that offers to "update" the
Flash Player for me - but that's a useless exercise, as you've seen.
When that happens, I just highlight and Copy the URL, then start 32-bit
IE8 and Paste in the URL and hit Enter and watch the video. It's a
nuisance, but it takes less than a minute.
And, by the way, Adobe doesn't even hint at this on their Adobe Flash
Player home page:
http://www.adobe.com/software/flash/about/