Thank you for visiting the Microsoft Windows Vista Community site.
You can use the Xbox Live Vision camera as a webcam with Windows XP or Windows Vista. After you connect the Live Vision camera to a USB port on your computer, the Found New Hardware Wizard should launch automatically. Choose the option to let
Windows Update find the driver automatically. Once the driver is installed, the Live Vision camera should work with any software that supports USB cameras, like Live Messenger, Yahoo Messenger, Skype, etc.
Note: The Xbox Live Vision camera does not have a built-in microphone like many webcams. If you want to use it to chat with both audio and video, you will need to connect a microphone to your computer as well.
If you still face issue would suggest posting your issue in the Xbox community.
Please visit the link below to find a community that will offer the support you request: