IE8 not able to play video

I am using IE8 and trying to view video on youtube.com and other sites and the error that I am getting is

Hello, you either have JavaScript turned off or an old version of Adobe's Flash Player. Get the latest Flash player.

I have installed the latest version of Flash Player and also have Java installed on the pc but the video still will not play. I set my IE security to medium and checked the firewall for an exception to IE. I beleive Java is the latest and greatest and installed Adobe Shockwave.

Any Ideas on how I can resolve this?

Thanks iin advance for the help!

You have mentioned that you have Adobe Shockwave Player installed, have you installed Adobe Flash Player 10? if not you need to install that as well.
Missed your earlier statement.
You could try uninstall IE8 and re-install.

I have Adobe Flash palyer 10 activeX and Adobe Flash Player 10 Plugin installed. I guess I could remove IE8 but trying to avoid doing so if at all possible.