You cannot use this device when another video application, such as DVD, video conferencing, video editing, TV viewers, or ...

You cannot use this device when another video application, such as DVD, video  conferencing, video editing, TV viewers, or WebTV for Windows is already using it. To use this device for your current application, close the application that is using it. If WebTV is installed and running on your system, pause the "WebTV video and data services" on the taskbar tray by right-clicking its icon and choosing "Pause Services".