You cannot use the internal recovery factory partition once another OS is installed.
Regarding the Webcam. Press [Windows] and [Pause|Break]. Select Device Manager to the far left do you have a category called Imaging Devices? I think it won't be there given your result with the online diagnostics.
To ensure Windows 7 is setup correctly. Follow my Windows Reinstallation Guide/A Clean Install of Windows 7 for best results:
http://philipyip.wordpress.com/dell-community-forums/
A Clean Install will give you optimum performance. Install Windows 7 64 Bit from scratch and install the following drivers in order: