Reason: This is a well known problem with Asus laptop. It seems that the generic camera driver in Windows 7 is not compatible with Asus' camera. I have here an Asus K501J series laptop and when I view my camera in Yahoo Messenger, the output is upside down.
Solution: Download the updated driver from Asus support site. Search for your laptop model, and try every camera driver listed. There are usually 4 camera drivers listed/available. So, if the first did not work, try the next one.
Solution 2: Edit Windows Registry. Go to: HKEY_LOCAL_MACHINE\SOFTWARE\Sunplus SPUVCb\VIDEOPROCAMP. Change VFlip value to 1.
Solution 3: If you're having problems in downloading your webcam driver, download and install ManyCam. This program is free and can flip and rotate your camera output. Also works with Gtalk, Skype, and other programs.
Known Asus laptop models with this issue:G50VT-X, G51Jx, W7J, G1S, N50v, M70, Asus X53Ka, N10J, N10jh, K50, K50IE, K50IJ, Asus G50Vt-X1, ASUS laptop G50 vt, Asus K60i, ASUS U50F & K60I (K60IJ), Asus Pro71L notebook, Asus G50vt,asus G50Vt, ASUS N50VC laptop, Asus x59sl,