This is the page.
warsanpost.com/index.php/wararka-manta/298-testing-video
i uploaded a video named testone.flv to the server, put it in the directory images/videos and set the plugin to get them from that directory. i put a video {flv}testone{/flv} but it does not play. i tried another mp4 video but it also does not play.

But when i insert a YouTube URL it plays fine. i wonder why?

The link you provided is not working. It returns a 404 error.