I got my camera working, simply by uninstalling the driver and software, something I didn't want to do because the last time I did this it took me forever to get the right software since there wasn't anything for Win7, at least from what I could see. Microphone is working very good too, no buzzing like it was before and no more sound card conflicts.
Since my last post, I haven't done anything on the project but at least now I can move on to more exciting things. Still some little things to add to the set which I keep putting off for some reason, need to record the voices when I have some privacy and complete silence, I mean you don't want to hear cars in the background and my usual neighbors stood outside my house shouting and comparing dogs or whatever.... Actually that could add some atmosphere! I'm kidding, but not a bad idea hehe..
Well I guess the point of this post was to let you know that I have a working camera now and that I can make some progress, I should animate those scenes that I can do as soon as possible otherwise this project will never be finished!