Recently I was working on a web site that had embedded Picasa slide shows and YouTube videos. (No, I didn’t want to build my own out of AJAX and web services.)
I found that my embedded flash objects were over lapping my html elements. This was problematic in that I had my navigation disappear whenever the flash object was “scrolled” over it.
The fix was to add the attribute “wmode” with a value of “opaque” (wmode=”opaque”) to the embed tag. Voila, the overlapping z-index problem was solved.
In case you’re wondering messing with the CSS z-index value of the containing layers didn’t change anything.