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Sounds like the CCD or a stuck shutter blade. Try this place: www.CamerasAndParts.com They only service Canons and they are the only place we recommend for the Canons. It's all they work on and they are about half the price of most shops, plus the work is just excellent through them.
It sounds like the camera is going to need to be serviced. Try this place: www.camerasandparts.com They service the Canon Powershots exclusively and they do exceptional work! This place doesn't on anything except the Canon models. They have a service package right on their site for servicing the SD1000 for the flash not working. Hopefully they can help. They are very reasonable as far as the cost. It's only $79 through them for parts labor and the shipping back included. The best part is they include the service for the camera at the time of the repair. This is where a lot of people go for help with the Canons, good luck with it.
It sounds like you need to send camera and flash in to Canon for service. Call them to set it up, it's free tech support and they will email you everything you need to know about the process of packing, shipping, having it fixed, etc.
There is a small battery (or large capacitor) inside your camera that stores a charge for when the flash fires. If you dropped your camera and hit the right spot, this battery may have been bumped out of position. A solution would be to open up your camera to see, but this is obviously risky and can void a warranty if you still have one. If you do choose to look inside, be sure to not tear any gentle wiring as this can ruin your camera for good (I know because it's happened to me).