This sounds like it might be a defective CCD imager. If so, Canon should fix this for you for free, including free shipping both ways. This is regardless of your camera's warranty status. Please check the following two links for more info:
HI Ihad the erro E18 on my camera, read about remedies such as banging the lens or pulling it out...
(More)
HI Ihad the erro E18 on my camera, read about remedies such as banging the lens or pulling it out and it worked, however E25 came up and the picturse almost look like there is not much color when in playback mode and a little fuzzy. any answers?
when i placed a memorycard it looks that the camera software erased nothing works and the lens is...
(More)
when i placed a memorycard it looks that the camera software erased nothing works and the lens is stil open the memorycard was from another acer pda
I see OK picture on LCD display before taking a photo, so I take one. When reviewing photo that was...
(More)
I see OK picture on LCD display before taking a photo, so I take one. When reviewing photo that was taken, I can see on LCD display photo with patterns that are repeated from top to bottom and colors that are somewhere between sepia and color technique.