Did you try using Mercury Messenger? I'd be interested to see how it works with the built-in iSight. Surely it should be MSN at whom you need to vent your frustration as they are the ones not supporting MSN with video and audio on the Mac?
You could try out a .mac account for 60 days for free. It's enormously useful for a lot of people. I use mine all the time. It can backup your Address Book, Calendar, Bookmarks automatically, and using "Backup", any other files that you choose to backup regularly. It integrates seamlessly with iWeb and Garageband allowing you to make high-quality webpages in minutes, and even edit and post podcasts (video and audio) directly. For some, the subscription is invaluable, for others, it's not so important. Not to forget the .mac email address and learning centre complete with training videos. You may or may not find it useful, but you have nothing to lose by trying it out free for 60 days.
AppleMacster