It is amazing that MS and Skype cannot fix this problem
it has been going on for months and still no resolution
windows 8 camera works
skype webcam says - "other application is blocking use - etc"
still the same - for months now
Which version of Skype do you use?
Run Skype >> WinKey + C >> Settings >> About.
Please update to Version 188.8.131.52
Run Skype >> Win + C >> Settings >> Permissions
Webcam and microphone >> move the slider to On.
Location - Dhaka | Bangladesh - Standard Time Zone: GMT/UTC + 06:00 hour
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Please close Camera App before using Skype because Skype cannot use the camera if some other application is using it. Close Camera App by dragging it from top to bottom. I hope this helps.