this here
http://www.x10.com/products/x10_vk75a.htm
Okay, it looks like you have the XCam2.
Those are designed for normal lighting conditions, not low-light.
I'm not sure if you are using it in a well-lit room or not. The lighting can certainly cause it to look grainy.
Another cause can be interference on the wireless signal. The X10 Cameras run at 2.4 GHz, which is the same frequency used for Wifi networks, some cordless phones, baby monitors, and microwave ovens.
The did recently release a newer model that has a different frequency, but that isn't the one you linked to.
Antenna direction can have a major impact on the picture quality, as well.
I know that with my own cameras, rotating the camera on the Ninja base could cause the picture to go out, as the antenna was rotated along with it.
You might want to play with antenna orientation, as well as placement of the receiver. There are also four channels available (there is a switch on the receiver, as well as a switch under a rubber cover on the base of the camera), a different channel might give you a better signal with less interference.