Vista - No Web Cam Picture on Windows Live Messenger

I have an Del Inspiron 530 with Vista Home Premium Service pack 1, and have been using my Logitech quickcam pro 5000 web cam for a year with no problems till yesterday. For some reason I can only see my friends web cam & they can't see me. I've tried the following and still no joy, please help : -
1. I've uninstalled and reloaded the Logitech & Windows Live Messenger software (Essentials - Windows Live)
2. I've made sure the correct web cam is selected on MSN by going on the "Show Menu" located on the top left on Windows Live Messenger, then tools, audio & video set up.
3. While I'm off line my web cam works but when I go on line all I see is a picture of a web cam with a red cross through it.
4. Logitech say my web cam is working perfectly and told me it's a Windows problem.

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Can your web-cam work with another application whilst WLM is running?

My Logitech quick cam pro 5000 can work while I'm using viewing my Windows media center if that's what you mean?