The only way this can occur from a malicious individual having physical access to a Mac is if the user has not set up a
firmware password.
Sure, assuming it wasn't already turned on and logged in.
Did anyone have physical access to your Mac?
Were you using Windows XP? This type of hacking across a network is much easier in Windows XP because the
built-in administrator account is created with a blank password.
Windows XP administrator accounts are not secure in general.
I suppose it's 'possible' someone randomly choose the OP to hack, but the logistics of a hack like that are pretty tough with even the sloppiest of setups.
There are two basic ways to accomplish the scenario the OP laid out.
#1 gain physical or remote admin access to the machine and install software capable of 'spying using the webcam' and 'opening a chat window'.
#2 trick the user into downloading and installing the software mentioned above.
Now, the software itself...
Assuming the 'hacker' in question wrote it himself, he could have it make a connection to him over the internet so that he gains access to the machine. This isn't likely as it would make it exceptionally easy to trace back to the original author/hacker. Windows or any other firewall software would probably block it, but having gained physical or remote access, the attacker can easily override this.
Most likely, the software would simply open a port on the local machine to accept incoming connections. Additionally, the software would probably be freely available (VNC for example). To use this method, the attacker would need to have an open connection to the machine over the internet. Any commercially available router in use on virtually every home internet connection would prevent this with the factory settings.
Which brings me back to the fact that the hack in question is so logistically complicated to do remotely (hack the router, find an unsecured Windows computer/partition, hack the PC, install software, connect back) that it's not reasonable to believe someone with that skillset would simply use it to spy on someone and taunt them over a chat window.
It's probably someone who had physical access to the machine while it was powered on and logged in, and then also had access to the same network that the computer was connected to. College dorm, roommates, siblings, etc.
edit:
Re-read a couple things. Windows 7 is pretty secure out of the box. Windows 7 has RDP turned off by default. I sincerely doubt someone remotely hacked the machine unless he had some sort of 3rd party RDP (VNC) app set up without a password. Even on an unsecured network, this isn't likely.
OP, since you're obviously capable of setting up WPA on your router, how about checking your router's DHCP client table. If it's recent enough, perhaps you can see how many IP addresses are assigned. The MAC address for each client is kind-of like a digital fingerprint for anyone that's touched your network. Easy enough to fake, but probably not for someone doing that level of amateur hack.