Lens gears are probably broken off, or other problem with lens. Will need to replace lens, or may possibly be repaired. I've repaired a few lenses with gears broken off, by replacing broken off posts with similar size plastic pieces(drilled holes and super glued in place, being very careful). Still working months after repaired. Olympus repair shops can replace anything needed, but at a HIGH price; sometimes cheaper to replace camera than to have them work on it.
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Unfortunately this camera model is not capable to record sound when in movie mode. The camera was not designed to support that type of functionality. There is no way to incorporate sound as the model was not designed with any audio output features.
YOUR CAMERA HAS A VERY COMMON PROBLEM THAT THE FE-210 HAS. YOU MUST PAINSTAKINGLY TAKE APART YOUR CAMERA PIECE BY PIECE. MAKE SURE TO CAREFULLY REMOVE THE SMALL SCREWS THAT ARE UNDER THE COVER PLATES FOR THE USB, VIDEO OUT AND DC INPUT SLOTS. ON THE RIBBON FOR THE FACE AND THE LCD, YOU MUST "LIFT UP" ON THE RIBBON LOCKS. SOME ARE BLACK AND LOOK LIKE A TAB AND SOME ARE WHITE AND LOOK LIKE A "PUSH IN" TYPE OF LOCK. THEY BOTH SWIVEL "UP", NOT PULL OUT!!! RETAIN THE WHITE LOCK AS IT WILL NEED TO BE PUT BACK IN THE SAME WAY. ONCE THE FRONT COVER IS OFF, REMOVE THE LCD THE SAME WAY. IT WILL HAVE 2 SCREWS IN OPP. CORNERS AND A RIBBON WITH A BLACK LOCK. ONCE THE LCD IS REMOVED, REMOVE THE MAIN BOARD BY REMOVING ALL OF THE SCREWS IN THE CORNERS AND THE ONES THAT HAVE "GOLD" AROUND THEM. THERE IS A SMALL SCREW UNDER THE DOOR FOR YOUR BATTERIES, DO NOT FORGET TO REMOVE THIS ONE ALSO. NOW, LIFT THE MAIN BOARD UP SO THAT YOU CAN SEE THE SMALL GOLD GEAR NEAR THE SHUTTER OPENING. TAKE A SMALL SCREW DRIVER, SUCH AS THE ONE YOU HAVE BEEN USING AND ROTATE THE GEAR. THIS WILL FIX YOUR PROB. NOW REVERSE THIS PROCESS AND YOU WILL BE UP AND SNAPPING.
Sounds as if this is a repair issue with the image processing chip inside the camera. You may want to call Olympus Customer Service and discuss the repair process with them. Their telephone number is 800-622-6372 option 2 and then option 3