You need the following programs to download Youtube videos and make flash wallpapers with them:
Flash2X Flash Hunter is able to download Youtube videos and save them as FLV files on your computer. FLV is a video format for flash. To learn more, please read How to download Youtube videos.
Flash2X Wallpaper Maker allows you to create flash wallpapers with FLV files. You can customize your flash wallpapers to play the videos once when you logon your computer, or loop them continuously. The program generates executable installer files for your flash wallpapers so that you can easily install them on computers.