Your camera seems to be working as it should.
See the Redeem iTunes Gift Cards on a Mac with a FaceTime camera help page in the iTunes Cards & Codes section of iTunes Support.
If that does not help, perhaps there is some other problem? Try Contact Support.
Well, go figure. An hour after I posted this, OS version 10.8.3 was published (or at least my computer just discovered it).
One of the items in the update FIXED the issue with the camera inverting for iTunes card redemtion. I just redeemed another card and it is working properly again.
Note iSight still shows an inverted image to the user. I have not verified if during iChat the image sent is inverted or not.
Sooo. iTunes issue solved.
TracRat wrote: ... iSight still shows an inverted image to the user...
Well, you asked .... almost.....
Software has always controled your iSight. (BTW - Apple has changed the built-in camera's name on newer Macs from "iSight" to "FaceTime" and then to "FaceTime HD." Regardless of the name of your Mac's built-in camera, the same info and troubleshooting applies.)
Many, but not all, software applications give mirror-image iSight views. Different apps work differently. Your Mac's Help in each application should give you more info on how each particular app works, but here are some suggestions for a few of the most common apps.
(1) iChat's picture-in-picture and Snapshot is "mirrored" by design.
We are so accustomed to seeing ourselves in the mirror that it looks strange the other way. Your movie clips and the view that your chat friends' see and are normal. Only video snapshots you make and your video preview are mirror-image.
FaceTime works the same as iChat (& Messages in OSX 10.8) because it uses the same system and QuickTime video software components as iChat does.
(2) You can change individual snapshots made with iChat, FaceTime, Photo Booth, etc. by opening the file with your Preview application and using the Preview > Tools > Flip Horizontal menu command.
Full-featured image editing software such as PhotoShop or PhotoShop Elements can also flip images that have already been saved.
(3) You can change future Photo Booth snapshots with the Photo Booth > Edit > Auto Flip New Photos menu choice.
More info is in Photo Booth > Help > Photo Booth Help. Search for Flipping a photo there.
(4) iMovie is different. Its preview window shows images right-way-around, as is the customary view for movie cameras.
QuickTime X (the QuickTime Player (version 10.x that comes with Snow Leopard) is also left-to-right correct.
(5) For mirrored video clips saved with Photo Booth or other apps, QuickTime Pro can easily flip them. Use QT Pro's "Visual Settings" controls in the "Video Track" section of its "Movie Properties" menu command to flip, rotate, resize, and edit other properties of an already-recorded video.
If you do not have QT Pro, the latest iMovie version, iMovie 9 (sometimes called iMovie '11 because it is part of iLife '11), can flip already-saved video. iMovie 8 (sometimes called iMovie '09 because it is part of iLife '09), can also flip already-saved clips. With either of these apps, click Clip Inspector > Video Effect: > Flipped to reverse the selected clip.
I do not think that iMovie 7 (which was part of iLife '08) can flip videos. However, if you have the previous version, you can import clips and flip them using iMovie 6's Editing > Video FX "Mirror" effect.
If you do not have QT Pro, you can use iMovie 6 HD. Import the saved Photo Booth or iChat 4 video clip into iMovie and use iMovie's "Mirror" effect in Editing >Video FX to flip it.
(6) If you really want to change your iSight's image, you can add iGlasses software. You can download the free trial to test whether it will do what you need before you decide whether to pay the modest price.
(7) If you are into no-cost, imperfect, and unsophisticated work-arounds, one kludged alternative for reversing images with any application would be to position a mirror as best you can so you are making video of your image in the mirror.
Yes. I have seen your response in at least one other place before. It was just nothing addressed the issue of iTunes having an issue, nor do any of the possible solutions seem to address the problem I am having.
Soo, I started a new thread to bring up the iTunes problem. Great info though EZ Jim.
I guess I wasn't the only one to spot the problem if update 10.8.3 addressed this issue! The timing was perfect for me...I hope it helped other people as well.
Thanks for the kind words, TracRat.
iTunes only recently began using the camera so it is understandable that iTunes camera issues were not previously discussed.
Although the 10.8.3 Update adds camera functionality to iTunes (see About the OS X Mountain Lion v10.8.3 Update), properly applying the Combo version of updates can sometimes correct software problems, even for users who have already updated via the normal OS X Software Update process. Your posts here will certainly help those searching for an answer to your issue or similar problems. That is the true benefit to other readers of your well presented topic here in Discussions.
Other OS X 10.8.x users who may have a problem similar to yours even after updating to 10.8.3 would do well to restart their Macs, use Mac's Disk Utility to repair permissions, download and apply OS X Mountain Lion Update v10.8.3 (Combo) , and finish with another permissions repair immediately following the restart that completes the Combo Update.
Well done and congratulations on letting us know how you remedied your trouble.