Given that 1507 is still CBB (alongside 1511) for the next few months at least, it's pretty poor that a driver/firmware update is breaking functionality like this, when business customers were encouraged to make use of the deferred upgrades to the OS. Performing an in-place upgrade to 1511.1, and allowing it to reboot enough to complete firmware updates, resolves the lack of IR.
Reported to Microsoft, and they're seeing the same symptoms when taking an SP4 from April to May, but haven't yet confirmed it's actually an issue. No problems in device manager, and trying to roll back to older drivers has no effect. Using CBB (1507), the symptoms are that the Hello setup is now in colour and tapping to switch to IR isn't working, though unsure if this was implemented in 1507. The group that develops the Surface cameras is the same group that worked on Microsoft’s standalone Lifecam. I've uninstalled and reinstalled the Teams desktop app and also the drivers for the camera. Most people tend to forget Microsoft’s exceptionally strong legacy of camera work. It still works with Skype for Business and the inbuilt camera, it also works for Teams web version. Can confirm that I have exactly the same problem on 2 SP4's (m3) since installing the May drivers (we also saw a firmware update occur). In the last couple of week the camera on my Surface Pro 5 has stopped working with Teams.
