Battery problem (DSC W70)

HI.
The camera is 2-3 months old. After being dropped straight into the lents mechanism it didn't manage to retract it back and displayed "turn off then on" or something like that. Having some knoledge about electronics and cameras I've dissasembled the thing and succesfully repaired it. However when I try to recharge the battery (the included li-ion) the charger lights up the amber LED for 1min then it turns off, i suggest some sort of protection. When the battery is inserted intro the camera (the camera works normally now) after some 1-2 min it shows a warning message to "use only aproved or compatible batteries" or something like that, then it powers off.
Is the battery dead? Some internal circuits of the battery failed or something? As I live in romania, service centers aren't a choice in my city, but as I have the proper tools and experience I would ask for a more straight approach of this problem :) (as I have nothing to loose, except the battery of course).