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First, remove the card, and look in the slot for any bent flash card pins. If you see any, don't fret, it's possible that you can fix this yourself. See this article on how to unbend flash card pins.
But if no pent pins are seen, then the camera's clock battery has worn out, and is likely causing this problem. Unfortunately this battery is internal to the camera. But Canon will fix this for you (for the S400 only) for free, with free shipping. Please see the Canon advisory for your camera here.
Canon had manufacturing issues regarding memory errors and also the CCD. They will fix this free of charge. Even if the camera is out of factory warranty. Contact Canon. They were very helpful and fixed the same issues on my S400
If you bought the camera in January, it's still under warranty for a year. When you get home call 1-800-OK-CANON to arrange warranty repair. They're usually very good about it, and will try to make things right.
1 set date to 31-12-2030 23h59 and switch camera off.
2 wait two minutes, day will be 01-01-2003 and camera asks you to set the date
3 take away memory card
4 set the date to today
5 insert memory card again
Now your error should be solved.
The onlything i can sugest you try is to reset the camera. Im not sure how to do this other then to remove the rechargable battery and the button battery. Its a little round silver disk looking thing. Let it sit over night and see if it resets.
Have you tried snapping a picture from every mode? TV,AV,SCN,Manual and Auto? Do they look washed out on your computer?
Can you take a picture at 640X480 (S) and upload it so i can see what it looks like? Post a link to the image.