I had this issue a couple of months ago and it was because the camera was using the Windows XP drivers; have you tried to reinstall the VTA application?
Another possibility is that you have MSN messenger using the camera, please close this application before trying to use the VTA.
And the last thing will be that you have the windows builtin camera applicatio opened (you will see it under MyPC), the name is normally something like "Cisco VT Camera".
And by the way, is the camera icon displayed under the CIPC display?
Hope this helps!