For a full explanation, see:
http://www.pilotsofamerica.com/forum/showthread.php?p=812598#post812598
The gist of it is pretty much what Azure said. You must be in actual or simulated instrument conditions, it doesn't matter whether you're in IMC or VMC, the approach must be continued to the MDA or DH (but not necessarily all the way in instrument conditions) unless safety requires an early level-off, you must continue to the MAP or runway, and there is no official guidance on how much of the approach must be in instrument conditions.
On the last point, my personal standard is that if I'm in actual instrument conditions at any point between FAF and runway/MAP, I log it, and nobody in the FAA has ever said that standard is inadequate (although some have said it's unnecessarily strict).
BTW, as an instrument instructor, I use different strategies for removing the hood depending on the type of approach. First, I brief the trainee that the s/he is in the goo as long as the hood remains on, and to take action accordingly. On a precision approach where I want the trainee to continue to land, I pull the hood 50-300 above DH (depending on stage of training). On a nonprecision approach where I want the trainee to continue to land, I pull the hood once established at MDA within appropriate distance from the runway (e.g., about 2 miles for an MDA of 500 feet -- time to to spot the airport and descend normally). Either way, if I want the missed approach executed, I leave the hood on.
Finally, while Captain is free to do as he pleases, not seeing the airport from the FAF is not necessarily being in actual instrument conditions, and it would take more than that for me to count it.