Windows 7 webcam not shown in Scanners and Cameras

I am trying to install a Logitech C270 webcam on a Windows 7 Home Premium 64-bit system.  I have used the latest download from Logitech and it basically installs correctly.  That is, it shows up in Device Manager under Imaging Devices with no errors and shows up under Devices in Devices and Printers and it works with Logitech's software.

The problem that I have is that programs cannot access it as a simple camera.  For example, if I run Microsoft Word 2003 and click on Insert, Picture, From Scanner or Camera it tells me that it is "Unable to connect to camera or scanner".

If I look in Scanners and Cameras, nothing is shown there.

I spoke with Logitech support and was told (after 20 minutes!) that the camera is a "webcam" and will not work as a "camera" in Windows 7 and that there are no cameras from Logitech that will do that.

My questions are:
1)  Is it correct that Logitech webcams are not supported as cameras in Win 7?
2)  Is there something I am missing about the installation here?
3)  Can anyone recommend a different camera/webcam ($20-40 preferred) that will work in this application?
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CompProbSolvAsked:
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epichero22Commented:
That's correct.  Windows 7 no longer supports webcams natively but certain programs, such as Live Messenger and Skype, will call upon and use the webcam inside the program.

I know that Logitech does make software to capture photos and videos using their hardware and it comes as an option when you install the driver.  I think that capturing a photo with the Logitech software and importing it into Word is your best bet to get the functionality out of it.
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CompProbSolvAuthor Commented:
Thanks for the confirmation.  The particular (web-based) application that I really needed it to work on had an alternate method similar to your suggestion.  I use the Logitech software to capture an image, then use the application to import it from a specified folder.  Not as convenient as XP allowed, but it is workable.
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