You may have damaged the lens mount. I dropped a G7 with the lens out and got the same message. If you are under warranty send it back. (That's why I have accidental damage insurance on my SD870.It's unlikely to be a DIY job!)
Lens errors are fairly common. Usually it's sand or grit interfering with the lens extension mechanism. Or the camera's been dropped with the lens extended. Or the camera has been powered on, but the lens had been blocked preventing its extension. Or the battery ran down with the lens extended ...
Here are some things that you can do to try to correct it. They only seem to work for less than 50% of the lens errors, but if the camera is out of warranty, they're worth a try.
The digital screen has these blotches appearing and growing - it's not affecting the pictures, but...
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The digital screen has these blotches appearing and growing - it's not affecting the pictures, but it's obscuring the screen
i dropped my SD870is on a trip, and at first there was a lens error, i was able to fix that but now...
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i dropped my SD870is on a trip, and at first there was a lens error, i was able to fix that but now the shutter in the camera wont open, the camera turns on and takes pictures, but the picture turns out black. im assuming because the shutter is stuck.. anyone know how to fix this!? i love this camera and im not ready to part with it