The code to embed your cdf should look something like this:
var cdf = new cdfplugin();
cdf.setDefaultContent('<a href="http://www.wolfram.com/cdf-player/"><img src="Untitled.png"></a>');
cdf.embed('Untitled.cdf', 267, 121);
To get this code, for your CDF, open the notebook you are using to make the CDF and go to File > CDF export > Web Embeddable.
It is important to make sure that the CDF and the image are located in the same directory as the html file. If not, you will need to give the directory to the png file and the cdf file.
Put an image in the same directory as the CDF and see if you can include it in your webpage using an IMG tag. Can you? If not, then this must be resolved first. Give the Img tag the file path to the image. You will need to do the same with the CDF.
When you say you see the mathematica spinning loop, what do you mean. Can you provide a screenshot of what you see?
