You probably have the one with the NVidia graphics chip don't you?
Reballing is probably your cheapest option to fix this actually.
This problem tells me that your graphics chip (GPU) on your motherboard has gone bad possibly due to overheating. What is happening now is that some of the connection under the chip has separated, possibly some melted and touched each other causing a short of sorts.
So either reballing the chip or replace the motherboard is your only options to repair this laptop I'm afraid.
SOURCE: I have LG E500 notebook and it's video card stopped working
Usuelly video cards are part of your laptop mainboard so you have to replace the whole mainboard.
SOURCE: LG E500
http://download.notebook-driver.com/driver/lg/E500/Vista/LGSmartCam.zip at this location ya will find the driver for vista and just reinstall the camera ...it has to work ...probably it came with a xp driver and ....
SOURCE: my Lg e500 laptop camera is not working and the
The solution is (even if it sound abit awkward and strange) this:
Turn of the computer.
remove battery.
start computer on ac-power
turn on computer and press F2 multiple times to enter BIOS
go to the last menu and reset settings to default settings.
save and restart computer (still on AC without battery)
when computer is fully booted, shut down again.
insert battery and boot up again.
it should now work when you start YouCam.
im not sure if all the steps are necassary, but i followed this guide and got it working !
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