Buddhist leader embracing naughty dance (7)
I believe the answer is:
lambada
'dance' is the definition.
(Brazilian dance)
'buddhist leader embracing naughty' is the wordplay.
'buddhist leader' becomes 'lama' (Dalai Lama).
'embracing' is an insertion indicator.
'naughty' becomes 'bad' (badly behaved).
'lama' enclosing 'bad' is 'LAMBADA'.
(Other definitions for lambada that I've seen before include "Fast Brazilian dance - mad Baal (anag)" , "Fast Brazilian 3 dn" , "number of Brazilian revellers" , "sexy dance" , "dance in South America" .)