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In the Page & Layer Gallery (right hand side of workspace) you just click the row MouseOff. The Page Background and Pasteboard Background should typically be locked.

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Your original video isn't in the .xar file, so i substituted for one I'm working with...

Moved content from Page Background to MouseOff
Deleted rectangle on Pasteboard
Edited Pasteboard colour...

You have content on your page background that should be on your mouseoff layer. I'll have a fiddle and post back shortly.

Yep, the < isn't needed. There's no audio because the sculpture doesn't make any sound. If the original video has an audio track, then it will play with audio.

Have a look at the 'Migrating Eels' video Lake Bolac Caravan Park If that's what you're after, here's the code I used in the 'Body' section of the placeholder:

<video controls="controls" loop=...