There is a known issue with mid-2013 MacBook Air, OS X Mountain Lion (10.8.5). If your Mac is NOT a mid-2013 model, this issue does not apply.
According to Apple's technical support article entitled "MacBook Air (Mid 2013): FaceTime HD Camera might not work after OS X 10.8.5 update", Apple is investigating this issue.
In the meantime, a 10.8.5 workaround is at http://discussions.apple.com/thread/5306216?tstart=0
Before you applied the 10.8.5 update, (or if your MBA is NOT a mid-2013 model) you could have used the built-in iSight suggestions from http://support.apple.com/kb/HT2090 to troubleshoot your FaceTime HD camera problem(s). After getting the camera working in OS X 10.8.4, if you use a mid-2013 MBA, applying the 10.8.5 update and the workaround should have given proper camera functions.
However, at this point, try resetting the PMU/SMC using the directions for
from the HT2090 page reset instructions for MacBook and MacBook Pro before applying the workaround.
If your MBA is NOT a mid 2013 model, consider the other HT2090 suggestions, too.
If your camera still doesn't work, or if the above suggestions seem more complicated than you want to attempt, contact Apple, your Apple retailer, or an Apple-Authorized Service Provider for service.
Here is a copy to the link that has the plugin:
The plugin will go to your downloads folder.
on your finder:
Go to your HD> Library/CoreMediaIO/Plug-Ins/DAL
Open another finder window, or if you have TotalFinder open another tab, and then click on OPTION while you doubleclick on the tab where you have the DAL folder selected and on the new tab select the downloads folder and drag the new plugin into the DAL folder. A warning window will pop up saying you can't modify DAL files, but click on Click on "authenticate", and it will ask you if you want to replace the file, click yes, add your computer's access/admin password if you have any, and restart your computer. Voala! you should be all fixed up!
If for whatever reason you have problems with that plugin link, here is another download option:
Best of luck!
Thanks for letting us know that the 10.8.5 Combo Update helped you, nmirza.
Apple has now published the "OS X Mountain Lion 10.8.5 Supplemental Update" to resolve the mid-2013 MBA issue (and a few others.) If you haven't installed it, too, you should do so now because Apple recommends the OS X v10.8.5 Supplemental Update for all users running OS X Mountain Lion v10.8.5.
sans_frontieres wrote: ... nothing has worked...
(1) Restart Mac, repair permissions, then download and install OS X Mountain Lion Update v10.8.5 (Combo). Do this now even if you have already installed the Combo Update using some other workflow.
Repair permissions again immediately following the restart that completes the Combo update.
Test camera function. If you still encounter a problem with third-party software like Skype, test more than one Apple camera app in more than one user account.
(2) If your problem continues, use OS X Recovery to reinstall Mountain Lion. Then use > Software Update… to verify that all your software is up to date. Install any needed updates and repair permissions one more time.
how do I repair permissions?
Use the Disk Utility app that is in your Mac's Finder > Go > Utilities folder.
If you need more specific help than is available in Disk Utilities > Help:
• In the sidebar of the Disk Utility window, select the disk you want to check.
• Then click the "First Aid" tab.
• Finally, click Repair Disk Permissions.
• Let the process run until it reports that it is finished.
The first time you repair permissions, it can take more than an hour on large disks that have many problems. Don't worry about that.
You may encounter Disk Permissions messages that you can safely ignore. You need not be concerned about them. Disk Utility will tell you if you need further action or should have your disk serviced.