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If the D40 monitor showed you the image while taking the picture, there was something seriously wrong with the camera, which now appears to have fixed itself.
The D40 works as SLRs have worked for half a century, giving you the image through the viewfinder. The LiveView capability, allowing you to use the LCD monitor like a point&shoot camera, is a relatively new development, which Nikon introduced with the D3 and D300 a year after the D40.
That's the way the D40 works. The monitor is for menus and picture review, not to show images before shooting. Nikon introduced the LiveView capablitily with the D3 and the D300, introduced after the D40. The D40 works as SLRs have worked for half a century, giving you the image through the viewfinder.
There's nothing wrong with your camera. The D40 works as SLRs have worked for half a century, using a mirror to project the image through the viewfinder. The live view feature is a relatively recent development among dSLRs, previously available only on point&shoot cameras.
Because it's not supposed to. The LCD on the D40 is for menus, shooting info, and image review. It takes pictures the same way SLRs have done for half a century, allowing you to view and frame through the viewfinder. Only more recent dSLRs (and not all of them) have the Live View feature allowing you to use the LCD instead of the viewfinder.