UNABLE TO TAKE PICTURES

Did you switch to Tv (shutter mode) and took pictures for several seconds? like in the dark? Because saving the picture can take as long as the shutter time was.
Before panic. (Actually you never should panic) check your camera in automatic mode. And make sure you did not select any power save action, that puts your display on dark while shooting.
But always be sure your battery is charged and check its capacity. In the menu yo can check under the wrench symbol, when you select Battery info. Page 268 of the manual.
Working with a bad battery can damage the camera in the end.

Canon XM2 Instruction Manual

let the camera in action do the talking

hint a mobile phone can do just as good as job as
a $2000 cam corder

The display being blank can be due to failure of the LCD or the CCD which is the optical sensor of the camera. So to confirm check the older picture to be seen on the display. Confirm this by checking the card on your PC. If the images/picture is seen to be of good quality, then the LCD can be faulty, fault on the linking cable or the control board.since you are able to seen the ICONS the LCD is good , Now if the picture taken are seen well the CCD is also OK and the fault seems to be a digital logic gate failure as there is no switching of the circuit .

This might require a probe and it might be a relative issue in the motherboard circuit or the processsor. Remove battery , press down all buttons to drain off voltage and see if the camera resets.

Thank You for using fixya

Your problem can be the result of a number of causes - two common ones I will list here.
Most common cause would be a failed printed connecting cable between the main camera electronics and the flip out display panel. This special cable passes through the display hinge and is sometimes subject to failure.
A second possibility is a faulty display backlight.
You can check that the camera is still producing video output by using the AV cables conected to a TV display with the camera set to CAMERA mode.
I trust that this information is of assistance. RHN

Try this...if you can still get into the setup menu, scroll to "reset" and follow the on-screen instructions. If not, remove the memory card and battery...press all the buttons...leave the camera alone for 20 minutes...insert the card and then the battery...turn it on. Did that help?

See this link. The symptoms you describe indicate your CCD sensor is bad.

I have a sony cybershot DSC-S650, the LCD was very dark and could not see anything except if I pointed it at a bright object, everything else worked ok. I could take pictures but could barely see them in playback as well.

I took it to Sony authorised repair outlet and was told the CCD was damaged, they charged me USD $55 to repair it (in Quito, Ecuador)

See this link.

CCD malfunction, common with Sony manufactured CCD chips. You are in luck, its a free repair regardless of warranty date.
http://www.usa.canon.com/consumer/controller?act=ModelInfoAct&tabact=SupportDetailTabAct&fcategoryid=223&modelid=8044#

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.