Does the built-in iSight camera work with any other native application in Mac OS X?
Does the camera appear in the 'system profile utility' under hardware? If it doesn't
there may be a problem with the connection inside the MacBook itself.
Have you tried to see if a re-set of 'System Management Controller' (SMC) could help
with the functional state of MacBook 13-inch 2007 computer? ...That's a possibility.
• Reset the System Management Controller (SMC) on your Mac - Apple Support
You may also see if a reset of NVRAM could be of help, given these re-sets affect
different functions ... See • NVRAM for information about those reset instructions.
{Perhaps the dysfunction with the keyboard (all caps) may be resolved by using these.}
Because Skype will be changing (in March 2017) you will also need to review several
details including how latest updates may work in your older MacBook & old Skype.
The 'Skype for Web' may be conditionally difficult to use with older unsupported browsers.
However they still offer an application, also an update as the app evolves, in March. They
are going away from the 'peer-to-peer' model, to a 'cloud-based' model.
Find out how much bandwidth you need. ~ Other information about Skype's transformation
update is available from Skype/Mac https://support.skype.com/en/skype/mac/ help pages.
https://support.skype.com/en/skype/mac/start/about-skype/
You may see about using an external camera &/or USB headphone/microphone, to test.
https://support.skype.com/en/skype/mac/search?q=usb+headsets
In any event...
Good luck & happy trails! 🙂