I've never heard of a webcam losing quality before. Anyway...
There are three main parts to getting good quality on that camera: lighting, settings, and capture method.
With lighting, you need to have lamps: one above the minfig, one behind it that's pointing at it, and one in front that's pointing away slightly and close enough so some light gets on the front of the minifig. All of the lamps shouldn't have any paper on them.
With the settings, the exposure should be somewhere past halfway, the gain less than a quarter way, brightness a little more than halfway, contrast at the spot where it doesn't looks foggy or heavily contrasted (it's before a quarter way), color intensity just a bit behind the contrast, and the white balance at the spot where tan looks normal but white isn't yellowed (around a quarter way). Make sure anti-flicker is off. (Red might look too vibrant with these settings, I'm going to find out how to fix that.)
With capture method, you should film in high resolution in a capture program that can do frame averaging. Frame averaging really helps!
Not literally dead, just no longer interested in Lego or animation.