LiveJournal parses tags for the server hosting the file. If it is on their whitelist, it is allowed, otherwise you get the "invalid video code" error. I don't know who controls the whitelist, but they're pretty particular about embedded stuff (JavaScript, iframes, embed, etc.) because they can OMG STEEL UR C00KIEZ if they're from an untrusted source.
sixapart has to whitelist every company that they will allow video embedding from. if it isn't whitelisted - the embed won't work. i sometimes get around this by - taking a screenshot of the video. making a jpg image from that. uploading that to my scrapbook or flickr. posting the image and hotlinking it to the video url. how's that for good times. meh. it's a pain in the ass this whitelisting shit. the one thing that i like better about blogger.
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More info: http://www.livejournal.com/support/faqbrowse.bml?faqid=268
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