Problems with webcams can come from different sources. The problem may come from the webcam hardware or drivers, or the software that's trying to use the webcam may have a problem.
If it's not the webcam itself, it may be the program that you are using. It is a known issue that some programs do not recognize built-in webcams. For example, Muvee AutoProducer does recognize the webcam, but Windows Movie Maker does not. If your program does not recognize the webcam, you should refer to the manufacturer's website for updated drivers, documentation, and patches.