Personally, I'd make the "reputable dealer" replace the unit with another.
But realize it's almost a two year old product, so, you might want to upgrade to a newer model.
Device Type: USB
Model: PC-2008F webcam
Operating System: Windows XP Professional
Age of Device: < 2 years old
Maybe, You might only need to get updated drivers for it.
See this link for a similar problem
The only easy day was yesterday.
...some do, some don't; some will, some won't (WR)