When embedding a video, simply click on the video icon in PowerPoint (looks like a film strip) and choose the file from the Windows Explorer or Mac Finder pop up window.
When I used PowerPoint for Mac 2011, an embedded AVI file wouldn't play, but the WMV version works. It may be because Microsoft understandingly designs its products to be compatible with other Microsoft products. I also found out that on this version of PowerPoint, the video can be played in slideshow view, as well as in normal view.
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