Webcam doesn't work with Messenger

Saw everyone else's input on this problem. I have the latest version of messenger, the latest webcam driver. I am up to date on all sytem patches. Saw someone say it's a McAgee issue but was running Norton. Have since migrated to McAfee and have the same issue. Webcam works fine in both Yahoo and Windows Live Messenger when I test the audio and video. In WLM I am not able to make a video call anthough I can see and hear the other person and they can hear me. In Yahoo Messenger the Video Call icon is greyed out altogether. I have gone thru all the steps I have seen from a number of sources regarding webcam set up and Messenger setup and I believe I have it configured correctly. This problem started about a month ago and I am beginning to think it is related to IE8. Thoughts anyone?