The test.exe in that example is just a renamed copy of proxy.exe. It's renamed so it matches the BAT file, which is where the real work is done. If you read my blog post about the proxy tool it should be pretty clear. You'll need one renamed copy of proxy.exe for every BAT file you want to execute.

I have another question in mind .. how can i embed youtube video url in flash 8 .. when application is launched if internet connection is available .. youtube video will play else it will generate an error [ with out net connection]
When the youtube video plays, do you want it to open a browser or play inside your Flash movie?