Have you tried clicking on the camera button during a call or checking "Tools" - "Options" - "Video Settings" to see if Skype even detects your installed camera?
Webcam is working on the computer but in skype it is not working and the box with video/webcam is grayed out so I cannot do anything to turn it on.
My video call button is grayed over and I can't get it working I've tried tools-options-video settings and there is no on or off button for the webcam. Help?
Can you see your camera video feed under "Tools" - "Options" - "Video Settings"?
If Skype does not detect your camera, then you will not be able to use it. If you are using a processor that is not fully Pentium 4 compatible (like AMD socket/slot A processors), your video will not be detected in Skype though it may work elsewhere.