One of the new features in IndexItem 3.1.1 is the ability to add videos directly from Youtube.  If Enable Video is selected in the module settings, you have the ability to add a video file as you normally would.  You will also notice a new field there on the Add form.

The YouTube Video URL field.  Don't mess with any of that embed code that Youtube provides.  Simply copy the URL from your browser while on the Youtube page of the video and paste it into the YouTube Video URL field.  Capture Thumbnail will work with this.  Just select a time from the list.  When you are done, make sure to click Submit Video.  It may take a few minutes to load depending on the file size.  Once it has loaded you will see the video in the Add form.