the built-in camra in my mac book is not working

Did you get a used MB, or a brand new one?

I remember that being a problem on some of the older ones, with the light staying on near the camera, and all apps saying that it can't use the iSight because it is already in use, even though it is not.

Shut down your computer and turn it back on (not a "restart"). That alone might fix it if it's a glitch, and otherwise run any system software updates and perform another shut down.

I'm not sure what the percentage of it being a hardware issue, but the fact that the light is on would point more towards it being a software malfunction in my mind.

 

A SMC reset will usually address the issue you described. Take out the battery, unplug the MagSafe adapter, hold in the power button for 5 seconds, put everything back into place, start up normally.