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The problem stems from YouTube's ongoing efforts against ad blockers, which have altered the way their media resolutions function. VRChat relies on an open-source tool called YT-DLP to download and combine YouTube video and audio. Currently, they are using a customized version of YT-DLP that is incompatible with the latest updates from YouTube. You can attempt to resolve this by downloading the latest version from the main YT-DLP GitHub repository and replacing the tool located at %userprofile%\AppData\LocalLow\VRChat\VRChat\Tools\yt-dlp.exe.
While this may resolve your issue— it worked for me— it may not have the same effect for everyone, as it did not fix the problem for my friend. I recommend reaching out to VRChat support to encourage them to implement an update that addresses this issue.
Ultimately, the most effective solution would be for VRChat to acquire a license from Google to access videos without ads. By continuing to use YT-DLP, the VRChat team risks violating YouTube's Terms of Service, which could expose them to potential legal action (lawsuit) for tortious interference.
This has absolutely nothing to do with what is wrong. YouTube links are broken and cannot be played on the majority of user devices.