Make sure you're browsing
www.youtube.com and not m.youtube.com (mobile site). If you're on m.youtube.com, scroll down and click view desktop version. It only works with Internet Explorer.
If it still doesn't work, I've attached Youtube Player. Unzip, copy cab to your device, install.
**The app is written in a mixture of .net and C so you need the
.net runtime.
props to milesmowbray from xda for creating this app.