I had the problem of how to properly embed a video into PowerPoint 2010 running on Windows 7. I used the insert video command but a normal h264 video from my iPhone with a .mov extension did not work. So the video had to be converted into a different format.
If you ever wanted to convert video, there is an almost omnipotent tool ffmpeg, which can do the job. And also in this case the solution was to convert the file into some ancient wma codec using the following ffmpeg command:
ffmpeg -i InFile.mov -q:v 9 -c:v wmv2 -c:a wmav2 -async 1 -b:a 256k OutFile.avi
The .avi file generated this way can be inserted easily into PowerPoint 2010 and will be embedded into the presentation. On the slide the video can be configured to play automatically when the slide appears or after being clicked.