How to edit this to say (no live stream at this time instead of loading)

Yes, the .swf contains the logic for displaying that message.

That said, you'd need the source code (either an .fla or a Flex project) in order to modify the .swf.

The code above is what is pesently on the server, what inside this code would need editing?

Presently it just states:

loading...

I would like for it to say (no live video stream) an image would be great (how do I change the code)?

Do you know what part of this needs to be added/modified to say 'no live video stream is currently schduled' <--- example

This is my code that I am using it needs to be done on the server side.

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<div id="content2_vid">

    <object classid="clsid:d27cdb6e-ae6d-11cf-96b8-444553540000" height="377" id="videoPlayer" name="videoPlayer" type="application/x-shockwave-flash" width="640"><param name="movie" value="http://video.domain.com/swfs/videoPlayer.swf" /><param name="quality" value="high" /><param name="bgcolor" value="#000000" /><param name="allowfullscreen" value="true" /><param name="flashvars" value="&videoWidth=0&videoHeight=0&dsControl=manual&dsSensitivity=100&DS_Status=true&streamType=live&autoStart=true&serverURL=rtmp://video.domain.com/live/livestream" /><embed allowfullscreen="true" bgcolor="#000000" flashvars="&videoWidth=0&videoHeight=0&dsControl=manual&dsSensitivity=100&DS_Status=true&streamType=live&autoStart=true&serverURL=rtmp://video.domain.com/live/livestream" height="377" id="videoPlayer" name="videoPlayer" pluginspage="http://www.adobe.com/go/getflashplayer" quality="high" src="http://video.domain.com/swfs/videoPlayer.swf" type="application/x-shockwave-flash" width="640"></embed></object></div>

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Thanks