Also, I have found with my PowerBook G4 - if I am too close to my iSight (Web Cam) - the camera doesn't seem to be able to focus well enough - so try sitting back a little way from your camera and see if that helps - it could be just a focusing issue.
Also, since it sounds like you are running Windows - I suggest turning off as many programs and SERVICES as you can to get as much out of your RAM, Virtual Memory, and Paging Files as possible. When capturing video try limiting yourself to just Windows Movie Maker. Turn off your web browser, turn off your email, turn off your IM (this includes the task bar quick launch icon - this means your messenger is still running, even if you don't see your buddy list). And then check your services - if you have something like Apache or IIS running in the back ground - disable them until your done doing your video work.
The more you shutdown, the more memory you will squeeze out of your system.
The Amazing Caine