Flash Player usually pops over the video when it's not working. How long have you been having this problem?
Strange.. I've never seen anything like it then...Maybe your firewall is being a dick?
Have you tried opening the Task Manager and seeing if anything is out of the ordinary, like maybe a high CPU usage or any programs that are taking up too much memory. I dunno, sometimes programs strain the CPU usage and slow certain things down or freeze them completely.