Hi,
First I recommend switch to FCKeditor. More and more I find little things about TinyMCE that are very frustrating. TinyMCE does not respect what you enter in Html view, whereas in FCKeditor if you change something in html view and then save without switching back to wysiwyg view it will save it exactly as you enter it.
About the setting for "Include swfobject Script", all it does is include the swfobject script in the page for you, you would still need to know how to wire it up for your specific flash in html view.
Hope it helps,
Joe