Iam unable to operate the camera.. when camera is

Sometimes your computer will be unable to find the webcam if you have been using it in another program and it may still be hooked up to the previous program. You can reboot the webcam software by unplugging it form the USB port for a couple of seconds.
Test your webcam here to make sure it broadcasts OK - Hit 'Allow' in the top window and check your cam in the left hand panel.

http://www.testmycam.com/

If its not working you have a software problem. I would suggest you you uninstall the software and re-install the latest software from Microsoft hardware support

http://www.microsoft.com/hardware/download/download.aspx?category=ICE&type=LifeCam&sku=68A-00001

Once you have proven your webcam can broadcast you can configure it to whichever chat program you want to use it in - use the help section in the probgram for this