Camstudio is not for use with webcams. It records what you see on your screen. It doesn't take a video source. The purpose of Camstudio is for something like, if you wanted to record footage from a computer game, or wanted to make a video explaining how to do something in a program to post on youtube to help others understand how something works.
Your answer is incorrect, it will record 'picture-in-picture' which is what I'm sure the original poster is referring to. I came to this site for the exact same reason, my webcam is recognized and activates but the screen is black. From the camstudio.org website "CamStudio can also add high-quality, anti-aliased (no jagged edges) screen captions to your recordings in seconds and with the unique Video Annotation feature you can even personalise your videos by including a webcam movie of yourself "picture-in-picture" over your desktop."
I've never actually used the program, I just read somewhere, "Records screen activity from the Windows desktop into standard AVI movie files." and this site isn't actually affiliated with CamStudio in any way, shape, or form, so I just gave the best answer I could.
If you haven't used it, why not stfu? You don't know what you're talking about.