Longtime oDesker here, I've made mid 5 figures total. I recently received a notification from oDesk that I'm part of the top 5% of "successful freelancers" on oDesk which I interpreted to mean top 5% of earners. It honestly astounded me because my account has been basically inactive for the last 8 months and I've only worked on oDesk projects since a few months after I quit my job, roughly late 2011.
I started working oDesk mostly to stave off having to dip too deeply into savings. In fact, I read a lot of helpful information on HN related to getting your foot in the door for freelancing online and it ended up working very well for me. If you're looking to get an established profile, the short version is:
1. Build things (i.e. small projects, clones, browse project listings for things that would take a few hours and just implement them)
2. Tell people (learn to write proposals well, show the employers that you know your stuff and can produce)
Over time I slowly raised my rate and, surprise surprise, everyone who every wrote anything about raising your rate is right! The more the client is paying, the better they are. I ended up firing the client with the lowest rate because he was so bad and have done repeat work for my highest paying client.
As far as the tracking software, it has been buggy at times (I'm on Linux, I imagine they spend more time on other platforms) but I don't really see the big deal about having it take a screenshot. If the client is micromanaging to the point where he's having you remove 10 minutes because facebook showed up in your screenshot, it's not worth the time. I do notice that it tends to take screenshots when switching apps. On oDesk, I get hired hourly, I provide work hourly.
Just like any in-person project, online projects require you to have good communication skills - letting the client know when you're working, what you'll be doing, when you expect things to be done, technical tradeoffs, etc. None of this is unique to remote projects.
Additionally, just like the real world, there are endless people posting jobs expecting the moon in exchange for peanuts. I used to regularly receive "invitations to interview" from people who posted projects and almost always they were someone with an idea, looking for a coder, willing to pay $1k to get their facebook clone off the ground. While my girlfriend was impressed that my skills were in such high demand, it's can be a bit of a game of roulette trying to find serious projects and employers willing to invest real money. In my experience, setting a high hourly rate on your profile mitigates this situation quite a bit.
I also experimented with vworker and elance back in 2011, but neither of them ended up being a good fit. It turns out that when you're building your profile on a freelancing site, sticking to one site is pretty useful because you get feedback and projects to post about at the same time and alongside each other. Glowing feedback next to a completed project with 5 figures invested does good things for your profile.
If you're looking to get started with oDesk or have any other questions about how it works, I'm always free for a chat. Email is in my profile.