I looks like the html editor in moodle is messing up the javascript code. Maybe this is because it was never meant to be used for embedding javascript like this?
If this continues to be an issue, this is more of an issue of how Moodle is parsing your html and javascript, so you may want to go to a forum about Moodle for help with that.
Another alternative if that you could include your code in a .js file and use that instead. For example, you would put the following in a file called tempsimcdf.js
var cdf=new cdfplugin ( );
cdf.embed("http://edtechdev.mrooms2.net/file.php/410/Simulations/temperature/tempsim%20v7.cdf", 700, 700);
and then you would have the following put into your webpage:
<script type="text/javascript" src="http://www.wolfram.com/cdf-player/plugin/v2.1/cdfplug.js"></script>
<script type="text/javascript" src="location/of/the/file/here/tempsimcdf.js"></script>
I don't think that's 100% right, but it's the general idea. You want to keep all your javascript in files instead of writing out the javascript in what whatever dialog you are using for Moodle.