I finally found a way to get my sites containing flash, xhtml 1.0 validated! I have tried several different quirks and tricks to make the flash validated, with no real success - the Flash Satay example from an article posted at A list apart and the default Adobe embed to mention a few.

The solution was SWFObject from deconcept.com! To say it directly:

SWFObject is a small Javascript file used for embedding Adobe Flash content. The script can detect the Flash plug-in in all major web browsers (on Mac and PC) and is designed to make embedding Flash movies as easy as possible.

To mention a tip: you can use the noscript tag with the js script to include an image incase the browser cant read flash OR javascript.

A little update

Robert Nyman has written another way to do this, have not tested it yet, but check it out.