Lens errors are quite 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.
You can try the following:
1. Try compressed air. With a fine tip blow off gun and dry compressed air (20 lbs) set the tip between the lens turret and the camera body and turn on the air while moving the tip around the lens. It should remove all dust and sand. Turn the camera on and it should function fine.
2. Place the camera on it's back and look at the lens from its side. It may look slightly crooked. If this is the case, power up your camera and apply pressure gently to the side of the lens to center it. It should then extend fully.
3. [Try at your own risk] Try forcing the camera lens. Turn off the camera. Place it on the back with the lens facing up and take a look at the spacing between the lens and the lens housing. If you notice that the gap is not even all the way around the lens, the problem should be easy to fix. This type of a problem usually occurs if the camera was dropped while the lens was extended. Simply - VERY GENTLY - press down the lens on the side where the gap is the biggest. You should hear a click as it pops back into place. If the lens is stuck at an angle, put the edge of the lens not the flat front, on the edge of a table and press the lens back towards the center. It will either click back in place and work or it will break off one of the three pins that ride in the grooves of the lens barrel. Try powering the camera back on.
Alternatively, take a look here for some more tips!
http://camerarepair.blogspot.com/2007/12/fixing-lens-error-on-digital-camera.html
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