can you choose one of the following options
did you faced the problem after
1-re-installing the OS? (most chances)
2-uninstalling the driver and re-installing it? (might be)
3-or it just stopped working, like just after a reboot of the system? (very less chances)
and it was working fine before?
I want to know which change in the system caused the webcam for that behavior
and in device manager see under the Imaging Devices. does it say "Laptop Integrated Webcam" or some thing like "USB Webcam"
Well it is not a virus or some thing that directly hits your webcam. it's a very well known issue with Dell integrated web cams. the Driver gets installed by default when Windows XP or Vista installed. and that driver is not well supported with these webcams. they support as an external webcams with these. and they see it just as a webcam attached via USB.
and that webcam does really work but with less functionalities that it can work with. as you said it works in any other applications but not in the Dell Webcam Manager. that is, the WebCam Manager when tries to use your webcam it detects the valid drive before starting the webcam. it could also be the reason it could not detect that the webcam is connected.
Try the following. try second if one doesn't work
1-re-installing webcam driver (Not the Dell Webcam Manager)
2-open the device manager. under Imaging Devices select the webcam driver already installed. choose Update Driver and in the wizard choose search from the Internet options, make sure you are connected to the internet.
This problem can also be caused by other inter-relating applications which uses the same hardware device. when there is any bug terminating those applications if the application doesn't terminate properly then it can cause the webcam remained in use.
you can try Task Manger to exit the applications related Processes manually.