Friends cannot see me on MS LifeCam Cinema

Friends cannot see me during a Video Call initiated through WLM. I can see
them though.

Also, the option to choose to start the webcam instead of a Video Call is
greyed out when I click the camera icon in WLM.

My OS is Win XP SP3 with all the patches installed. I am also using IE8 with
default settings.

I have a third party firewall, but have also tried disabling everything in
MSCONFIG in both Startup and Services. Prior to taking this particular step,
I chose the option to hide all Microsoft services first and then disabled
everything in the Startup group before rebooting. However, it makes no
difference.

I have also uninstalled/reinstalled WLM again without influencing the
outcome.

Any feedback would be most welcome.

I tried posting this problem earlier this morning, but I don't see it in the
list anywhere.