Configure media management in Global Settings first (and also make sure you have NOT selected "Web-Friendly URL's").

There are 2 steps in inserting Media/Videos ... step one is by uploading them to the root directory via the Simple Uploader (bottom icon in Article Workspace) and then use the simple Media icon at top of Workspace browser. You cannot "insert" a media object until it has been properly loaded to the directory (thus your error message ... 'Object Not Found').

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