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XD cards are now obsolete memory cards. The cards were developed by Olympus and Fujifilm and released during the summer of 2002. There is now an adapter that allows an SD card to be used in place of the XD card You need to remember that the capacity should not exceed 2 GB or the camera will not be able to accept it. As far as I know cameras accepting XD cards were last produced in 2007, I don't know what specific models however the camera specifications would show what type card it uses.
First things first - need to make sure that the card is making proper electrical contact with the camera. Have a look at the contacts at the edge of the card and make sure they are spotlessly clean - even a fingerprint may cause problems.
Also, make sure the contacts in the camera have nothing causing a contact problem, and see if this resolves the issue.
What is the advantage of a 1 gig over two 512meg cards:
Usually the 1 gig will be priced lower than 2 512 cards.
The 1 gig card will hold twice as many photos.
That is about it.
Brand name has turned out to be a non-issue for almost all memory cards. They have to be made to a standard and they will all work.
Olympus and Fujifilm came up with the xD card.
And Sandisk is a trusted card maker.
I believe that Olympus may have a stitch feature that is only available if you use the Olympus brand of card.
A gimmick to sell more of their brand of cards.
This is pretty much of a non issue too, as there are plenty of software programs that can do stitching for panorama photos.