You might try booting into a USB thumb drive that has a mediacentric Linux OS on it to see if you can access the webcam from it. If it works in Linux then as Tomasz says, it's a problem with your Windows system. If it also doesn't work in Linux then it's most definitely a hardware problem.
Does the manufacture of your computer have any specific drivers for the webcam or does it just rely on Microsoft drivers? Any firmware updates available for the webcam?
If all else fails, webcams are not really that expensive. Check Amazon.