I recently installed Windows Live Messenger 2009 and have started to experience disconnects when I start with my webcam or start viewing someone elses web cam. 

Details:
I am running Windows XP SP2 with all the current patches (SP3 causes my Dell printer to stop working and Dell instructed me to deinstall SP3).  I am a Dell Inspiron E1705 Laptop and am running Windows Live Version 2009 (Build 14.0.8064.206).  I have a Logitech 9000 Webcam with 11.90.1263 of the software.  I am on my home network and have  D-Link wireless router with a fiber optic connection to the Internet.  I am using wireless on my PC to connect to the Internet.

I can start a chat conversation with my friends and everything is fine until I try to either see their web cam or let them see mine.  Messenger basically disconnects and logs me out the instant i get connected to the other party web cam or they connect with mine.  It does not happen with everyone but seems to happen frequently with people that I chat with in Asia.  I have tried the following all with the same result of disconnecting:

1) Start my web cam using the View Webcam option when you mouse over the webcam icon.  I see my video in the window and the other person accepts my request.  After about 10 seconds, I get disconnected.

2) They start their web cam using the same method.  I accept their request and see the connecting message.  After about 10 seconds, I get disconnected.

3) I start a video call between us.  I see my video and see a connecting message to their video.  After about 10 seconds, I get disconnected and have to log backin.

4) They start the video call.  Same thing happens.

5) I remove my camera alltogether and try to start a video call.  Same thing happens.

6) I remove my camera and have them start a view of their webcam.  Same thing happens.

I was using version 7 previously with this same webcam and did not see this issue so it seems to be something with Version 2009.  Any ideas?  Anyone else seeing this?

Mine is doing the same. Either me or the other person sends the webcam requests and I can see myself, then after about 10 seconds, as you say, it disconnects. However, I can sometimes see the other person, although not on all occasions.

Found a solution??

I have not been able to get this resolved yet.  i have been working with Logitech but they have not been able to resolve this for me either.  I think it is a problem with Windows Live 2009 and I am thinking of deinstalling and going back to the previous version.

I have the exact problem as the original poster. I also have pretty much the same hardware: Dell laptop (but DIY desktop fails also), D-Link wireless router and Logitech webcam.  And I use XP.

Like him, this only happens -- but happens reliably -- with certain users in Asia.  Actually, only one so far, other Asian friends no problem.

At first I thought it was a problem with the wireless, so I installed WindowsLive Messenger on my desktop which has a direct ethernet connection to the router.  But the same thing happened ("Local Area Connection 3 failed").

Then I connected the network cable directly to the cable modem, completely bypassing the router.  I had to reboot the modem to get a new IP delivered to the computer's network adapter, but eventually I was able to connect to Messenger again.

This time, my friend and I were able to view each other on webcam without any problems!

So the problem seems to be in the router, possibly the hardware firewall.  Maybe an additional port needs to be opened...

But this is not a good solution (I need my wireless!).  And I still believe something funky is going on in Messenger, not really the router.  Because I have NEVER had any problem using Yahoo Messenger or Skype.

Does this new info light a bulb for anyone more knowledgeable about network equipment than me?

How much are you guys downloading? This could be a Bandwidth issue, not a software issue or a setting somewhere. Can't say exactly as to how you can test this, but if it is a software issue, I would recommend seeing if MSN or Windows Live Messenger is updated all the way, you could even go a step further and see if the computer is updated all the way too. After that if the issue still persists, you can try opening it from program files instead of the start button (or flag for vista) And if still it is not working, I would try removing the software entirely using the add remove programs list and then re-downloading the most recent and up to date version of the software back onto the computer. Beyond that, I've got nothing!
Best of luck to you all!