From your style.css file (line 278):
#masthead{
z-index: 99988;
}
That z-index is rendering your header at the 99988th level, which is way above where the overlay is attempting to render (at the 8010th level [line 180 of jquery.fancybox.css]). Set it to 1 instead (or something small):
#masthead{
z-index: 1;
}
And the video is no longer covered up.