My first inclination is to assume that a lens error is the problem itself, but first, there is one more likely possibility, lack of sufficient power. Remove the battery, check the pins or connectors in the battery compartment, and make sure that they are positioned correctly to contact the battery. Then use a q-tip with alcohol to clean and dry them. It is also a known issue that digital cameras circuitry can also become much more sensitive to the lower power level produced, so if you have been using the same rechargeable battery for the life of the camera (more than 3-4 years), yours would be around 6+, then the power capacity of the battery may not be high enough anymore to handle the increased load. A new battery may be the answer.
If the above does not solve the issue please continue as it is very likely that the problem is a lens error.
The problem appears to be a lens error. It may be misaligned or an internal component has failed. Here are a couple of links to some other things to try. With newer cameras I am usually hesitant to suggest these options since they include some more extreme procedures that may cause further damage if not done correctly, but since yours is an older unit, they may save you an expensive repair bill. A Canon camera is used to demonstrate these procedures so, the lens structure of these compact cameras is the same so the examples do apply to this unit. These procedures are effective about 60% of the time. Click on or copy and paste the links into your browser.
If the "do it yourself" approach doesn't work out for you and you need conventional repair please see the note below
Note: While it is possible to have your camera repaired, it is a toss up as to if it is cost effective for you. Considering the age and present value of this camera, paying the cost of having it repaired , approximately $95 really depends on how attached to the camera you are. The standard "rule of thumb" is if the repair cost is greater than 50% of the value of the camera, it is not worth it. A good used or refurbished Canon Powershot SD850IS can be purchased for as low as $50 -$70 and a new on for about $85 and up.
Please keep in mind that my diagnosis & solutions provided are directly dependent on the accuracy of your description of the problem. As with any "do it yourself" fixes, success is a "team effort", since I can't see or touch the camera, and relies on the customer's manual dexterity and ability to follow the instructions well.
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