I fought this issue with Toshiba tech support with no resolution and searched the web for hours until I found a forum with a fix.
Problem: About one third of YouTube videos would sound okay and seem to buffer just fine, but the video was distorted and unrecognizable.
Fix: Go to this Adobe site and right click within the applet that loads on the top right hand corner of that page. (It looks like a screenshot, but it's actually an Adobe applet.)
Once you right click within that window, simply go to settings, then uncheck the "enable hardware acceleration button." Now close any open browser windows that are open, restart Internet Explorer and YouTube videos should all be viewable once again.
This seems to be a glitch within Adobe Flash 10.2 as near as I can tell. I just can't believe that Microsoft or Adobe have not released an automatic update to cure this issue. I can't be the only one this has happened to.