I have an HP envy webcam and I know what the problem is for sure. I've sent the computer back for repair twice with no satisfactory resolution from HP. It's actually quite simple what happened with this laptop. You have three typical lighting sources:
1) Incandescent
2) Fluorescent'
3) Sunlight
HP turned this webcam to ONLY look good under fluorescent lighting. If you attempt to use it in sunlight or under incandescent light it will look absolutely terrible no matter what combination of sliders you use. Turning low light compensation on or off will also have little impact.
Bottom line: Use this webcam only under fluorescent lighting. If you have to use it in sunlight or incandescent lighting you're screwed. Don't bother sending the computer back to HP if you've owned it for more than 20 days, they will refuse to help you and tell you that "that's just how this webcam works."
By the way, just for fun, if you have a location that has both fluorescent lighting and incandescent lighting, turn on your Envy webcam and walk around under both lighting conditions. Watch how good it looks under fluorescent lighting, and then watch it turn terrible as you walk under the incandescent lighting. It's pretty laughable HP released a webcam like this. Especially on one of their top of the line notebooks. What's even more laughable is their total unwillingness to fix the problem for their customers who deserved better.
Anyone reading this who's unhappy with this scenario (as I am) should at least take the time to contact HP and tell them we're dissatisfied. The Envy is an expensive computer and HP customers didn't deserve a webcam that won't work in 2 out of 3 ordinary lighting conditions.