The Problem:
After setting up a new Microsoft Lifecam VX-3000 Webcam on Windows Vista I found that if I initiated video calls in Windows Live Messenger then it worked fine, but if somebody else initiated the call, when the connection was made the Microphone and Volume sliders remained disabled and I could not hear or speak to the other person.
After searching the Web I found that many other people had the same problem but no definitive solution. Things I tried that did NOT fix the problem:
I upgraded the Lifecam drivers from 1.3 – 1.4.
I upgraded Windows Live Messenger to v8.5 (2008).
I Configured settings with the Audio/Video wizard in messenger a 100 times! Interestingly to get this wizard you have to hold the Alt key in messenger to access the tools menu.
The Solution:
After a very frustrating evening, I eventually fixed the problem.
Simply removing the Lifecam from my un-powered USB hub and plugging it directly into one of the USB ports on the PC made it work correctly.