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The number one problem with cameras with lenses that won't retract or or move out into position is dirt, grit or sand in the lens mechanism. The best way to fix this is to get an air compressor and put the tip up the lens and blow air into the space around the lens. Run the tip of the compressor nozzle around the lens and turn the camera back on. See if that helps. If it doesn't do it one more time.
If it helps, great. Stop there. If it doesn't help, let me know in a comment and I will tell you a couple more things to do. I want to wait, because they are things that you should only try if you are ready to trash the camera, but they usually work. Hope the air compressor works.
Hey, my husband just fixed it! You just wiggle/bend the zoom lens, and you feel a "pop", and then the zoom retracts and you're fine! I was afraid to "break" it, but someone on vacation had the same problem and told him this solution a few weeks ago. So don't be afraid to use a little force-at least, in our case, it worked! Good luck.
It may have jumped a tooth, something like a car timing chain. The Zoom in this camera is a barrel that has 3 cams that rides inside another barrel that has "tracks" for the cams. The motor rotates the the outer barrel via gear teeth, forcing the inner barrel to extend or retract. There is a tab on the gear teeth that might index the position of the zoom lens. If this tab is in the wrong position, if the gear jumped a few teeth, the camera may not know where the zoom lens is in relation to the inner focusing lens, and cause the "zoom error" If that is the case, I can help you get it back into position. This is a theory, but does explain the tab on the gear and the constant zooming.
If the "!ZOOM ERROR" message is displayed on the digital camera, switch the camera off and on again 2 or 3 times. If this does not clear the error, take the camera to your nearest FUJIFILM Service Station for testing and repairs. Problem may caused by lens zooming gears stuck.
If the lens is jammed in the out position you can try holding the camera firmly and tapping/hitting it against your hand with the camera on. The lens should then retract. If this doesn't work or if you are afraid of dropping it (do it on your bed, that way it doesn't hit the floor if you _do_ drop it), you can drop it on a wood/firm surface from an inch or so up and it should retract the lens. This solution ONLY WORKS IF THE LENS IS JAMMED.
Afraid not a novice or even an expert can fix this one.
It will have to be a repair of the zoom mechanism.
It will almost certainly be costly.
Check your Olympus support site to see what your local repair options are.