WordPress.org

1. Why is Video Sidebar Widget not compatible with WordPress 2.8 ?

It is not compatible because a bug was found to cause settings of multiple instance of a widget to disappear or mixed up. The bug was fixed in WordPress 2.8.1

1. Why is my Random Video sidebar Widget not working?

Reload the webpage where you use the widget, each time you reload, the widget will randomly pick 1 of the 5 video you set for display. there are chances that it displays the same video after you reload. Just try reloading again.

Random Video Sidebar Widget will not work on blogs that uses cache plugins. It is because the cache plugin will deliver the generated static page instead of regenerating blog page or post through server script. However, it may work if your theme has a page template with a different sidebar. You can then set your cache plugin not to cache that particular page or post, if there is such option available in that cache plugin.