You cannot watch Youtube videos on the x04 versions. There is no support for Flash on these units. The only way would be to download the youtube video and convert it to a supported format. There are no plans for Archos to write a plugin or upgrade to support Flash on these units.
This is gone into detail on http://forum.archosfans.com
Just for reference, I have an Archos 704 WiFi, use it everyday. I have taken some youtube videos, downloaded them and converted them. On the site I mentioned above, search for "Convert Youtube Videos" in the 704 section and there is some instructions on how.
Only the x05 versions will be supporting Flash