I am having a similar problem
I'm running windows 7 ultimate 64-bit edition. The cam (same model) came earlier today and I've been combing the net for solutions.
I've gone to microsoft's website for the cam and downloaded the windows 7 32/64 bit drivers like I've seen a lot of solutions post - LifeCam3.0 . (This has all been done at least 3-4 times and doing it again as I write this...in between attempts I uninstalled the drivers via device manager as well as the software). There are no errors during the installation, everything runs smoothly and I'm prompted to plug in the device.
I pop it in and windows makes the "device connected" sound and immediately a bubble pops up saying the device has malfunctioned and windows doesn't recognize it. Under devices its listed as "unknown device" and pretty much everything else is unknown. It displays the error message
"Windows has stopped this device because it has reported problems. (Code 43)"
If I go further into the manager and try to update the drivers, it says it's completely up to date based on online sources and the CD.
"The best driver software for your device is already installed"
I upgraded from XP to 7 a few days ago with a clean install on a stable machine that supports 64 bit...I have no idea what's wrong. Any help?
EDIT: I have tried rebooting before installations, rebooting once its installed and then plugging in the camera and various combinations.