It seems to be a common fault with this camera after contacting the store that i bought it from and being given the runaround I gave Fuji a ring and was told to send it to them and it would be fixed at no charge. Sent away on the next Friday and returned the next Monday week. Great service very happy.
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Make sure that the SETUP option is nearest to the black mark on the camera, if you are still not shown the options menu, you should probably call Nikon USA to get the camera serviced if still under warranty.
Something seems to be broken or off between the mode dial and the switch. It also may have broken internal parts. I have had a camera with a similar problem. It was that the small switch inside was broken, and could not be repaired. These mode switches can be changed, but will require a digital camera repairman to do such a job. It also could be sold for parts/repair on a site such as Ebay.
This is a known defect in the dial's shaft. Fuji has been replacing them for my customers at no charge. Several have just broken off with no force. Fuji is good about fixing them, even out of warranty.
Mode dial repair kits are often listed on eBay. Don't try the repair yourself unless you have some experience in dismantling (and more importantly re-assembling!) modern cameras - although given that getting an "official" repair is not economic it may be worth the risk.
There are instructions for replacing the dial here
It's really not that difficult but patience and good eyesight are needed.
Hey i had the same problem. Saw your post and none others. Finnaly i gave up looking and just started tearing my camera apart. My camera is a Kodac 7630 so the diss assembly may be a little different but with the removal of a half dozen screws i got to the inside of the dial. It didnt feel sticky but i took it apart any way and cleaned all the touching serfaces of the dial with rubbing alchohol and my problem is solved. took about 30 min and there was really no danger of harming the camera. Its amazing the just a little stickyness caused the problem i was having because i could push with all my might and the dian didnt budge. i thought a part was broken in there. i think this is because you allso have to push down to move the dial so a little tickyness combined with your downward presure makes it impossible to turn.