I have a canon s5is and when i take sport pictures it is always blurry. I have it set to auto and i reset to facorty settings

Do a factory reset, then apply your user customization settings one by one until you find the one which causes this problem.

The camera has an auto timeout enabled try setting it to 'disable' when downloading

I think your camera is keeping the lens open too long. You have it set on "bulb" setting. Rather use auto.

You can download the manual and more from the manufacturer's web site at
http://www.usa.canon.com/cusa/support/consumer/digital_cameras/powershot_g_series/powershot_s5_is#BrochuresAndManuals

Please see if the mode forr picture is set to normal, Try to select auto mode and then manual mode to see if there is any change.
If you notice that the grains come on in low light, try pictures in good light to confirm. If still bad the camera needs a check for a faulty imager unit./the CCD might be defective.
Take an estimate to decide.

usually that just means you need more light. Try turning on any lamps close on and see if that fixes or improves it. It should so some improvement.

The sport setting uses a faster shutter speed to stop motion. However, if you have the ISO set to a low number and try to take action shots in dim light, they will be blurry. Either use auto ISO or use a higher number such as 400 or 800.

That's a big lens and for sports photography you are going to need a lot of light to ensure you can use a fast shutter speed to capture the action. Sports mode may do too much for you and you might want to try switching to a more manual mode. Try switching to Tv mode which gives shutter speed priority. Set the shutter speed to something around 1/150 or higher (1/200) which should be fast enough to freeze the action. Make sure the ISO is set to 200 or 400 for best results and see how you get on. This should stop any action based blur which would leave you with focus problems if the pictures are still blurry. Check out http://www.dpreview.com/reviews/canoneos450d for info on what this camera can really do for you

low light means the shutter stays open longer to capture the image.   Try changing exposure settings.