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Your lens is gone now, sell it on ebay as is, and buy another camera like yours for $20-30. Repairing such camera may involve just dust cleaning like very thin sand etc. or more work; anyway if you can find a guy who will do it for $10 then have it done. If not sell it on ebay for 10-20 and buy another one for 30. Keep the accessories!
Unfortunately nothing. The camera does not have the ability to play back any sound during movie recording as it does not have any way to capture audio. The camera was not designed with this type of functionality.
I would have the camera looked at by an authorized service technician. You could bring it to a Geek Squad® precinct in one of our Best Buy™ stores, and an agent can look at the camera and if need be send it out for service.
I had the same exact problem.The lens is not extending out fully or correctly, probably has broken or damaged gear or gears and needs to be replaced. Expensive repair done by Olympus. It is a very tricky and fragile repair on your own, requiring micro screwdrivers and soldering tool. I replaced my own lens but it was hard to find one.
This sounds like CCD sensor is faulty and should be replaced . Camera works fine in playback mode generally with this problem but not in capture mode ( camera has gone 'blind'). Should be repaired free of charge if the camera is as old as you say.