Unfortunately, YouTube videos, like most web videos now, are the FLV format, which MEP doesn't support.
There is a really nice video program called KMPLAYER (www.kmplayer.com) which supports virtually every video format, including FLV. It also has a "capture" function. I've never used it myself, but apparently, it will capture the flv video and allow you to save it as a more common format, one that MEP does support.
You can download the video from YouTube by using the Mozzilla FireFox browser and installing the "Download Helper" extension.