Node with view selected does not load custom node template

I am using viewfield for the first time. I have a node type with a custom node template. One can select to use a video, an image or a view in one section of the node. I modified template.php to create some custom variables. The node template is used properly but when I select a view it seems that the default node template is used. I'd expect that the custom node template is used. Is that some thing anybody else has seen? Is there a way around it?

On a second note, it would be nice if the view could be placed into the node without all that extra html that views creates.

I'd appreciate any pointers,
Werner