Assign category a default post type

I’m also wanting the post to be assigned the post type “Video”.

You can’t just change a post to a different Post Type. There is a difference between “Post Type” and “Post Format”.

From your examples I assume you would like to change the “Post Format”, as per the codex http://codex.wordpress.org/Function_Reference/set_post_format, you would need to paste that code in functions.php.
Then call that function in your template. eg:

<!-- Loop Start here -->

    //* If post has category YouTube - set post type to video
    default_post_type($post_id) {

<!-- Loop End -->

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