There is no permanent fix--there is a temporary one I found, but it is risky.
The lens stops extending because it doesn't detect the lens cover opening all the way.
I was able to get mine to work again by opening it up using an eyeglasses screwdriver. Large amounts of gunk build up along the lens cover and its mechanism--so clean that all off with a q-tip and some alcohol.
Once the lens cover and its mechanism is completely clean, it should be able to open and close a few times. Unless you want to be cleaning it constantly, a new camera is your best choice.
Dr. D
August 2008
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