My video not streaming via Skype

Hi, I have an Intel iMac, my friend has a new MacBook. When we Skype, I see him, but he can't see me.
My built in iSight camera does not come on automatically when I call, so I choose Skype>Preferences>Video. Then the green light next to the camera comes on and I see my image. He can't see me at this point (I think that is intended - video does not seem to stream out when the preferences window is open). But when I close the preferences window I believe that my camera should stay ON and my friend should then see my image. What actually happens is that the camera turns off when I close the preferences window - so he still cannot see me.
Any ideas anyone?
Intel iMac   Mac OS X (10.4.8)  
Intel iMac   Mac OS X (10.4.8)  

Found the answer myself - little blue video icon.

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