I can see that I'm becoming one of your favourite users.
To step through this. I am NOT adding media using the tool button. I can adding flash manually using <object /> tags.
The first image (sadly using ImageShack) is what it looks like when I first type it in.
The second image is what happens when we go back to Design view
This is a last look at the view source in the browser.
Any reason why the editor is doing this to the tags?