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Make sure the mirror lockup switch is not activated. Take lens off camera, look inside camera through lens mount and make sure mirror is in down position. When the morror is up, it blocks everything in viewfinder.
The s7000 has three different display modes: Screen, viewfinder, and off. Screen is for looking at the big screen, viewfinder is for looking through the digital viewfinder, and off should turn off all the displays. Try pressing the DISP button once. That should reactivate the screen and make it possible to use the camera again.
The lens cover is supposed to be retracted when you select camera with the switch on the left front of the camera. This is a common failure and you should look at the cover to be sure that it is retracting. If it is and the camcorder will playback then you have a very expensive internal problem.
It shouldn't be there, but as the optical viewfinder is completely separate from the photographic light path it's nothing to worry about either.
Normally it's caused by either a hair or fibre which has somehow entered the viewfinder (rare) or more commonly by a fine scratch across the front window to the viewfinder. Also check the rear viewfinder viewing lens as the same damage could occur there but as that lens is relatively protected it's unlikely.
Any further fixing involves dismantling the DSC-V1 and possibly sourcing spares made of purest unobtanium so if the camera works perfectly well then leave the screwdrivers safely in the toolbox for now.
This same thing happend to me awhile back. Camera seem to be dead for several weeks until one day I tried turning on and then off the night vision. The was the usual click inside the camera and all was well after that. I still use the camera.