Hi! My name is ***** ***** I've researched your issue and I found that many people have had this issue and have had to send the camera in. If it's in warranty or you just bought it and can return it, you may want to do that. I'm guessing since you opened this question, that may not be the case. That error indicates a mechanical failure in the system, so what you tried was on the right track.
So I have seen repair estimates that look too expensive for the price of the camera, but several people were able to fix the camera using this method. I REALLY hope it works for you! If you DO decide to try to repair it yourself, BE CAREFUL - there is a capacitor in there that will hurt you.
 With the camera switched off slide the ‘Zoom lever’ to the right (T) position and hold down the ‘Shutter’ button for a few seconds then switch the camera on. You need to still be holding the ‘Zoom lever’ and ‘Shutter’ button.
This seems to force reset the zoom to full extent. Then switch off the camera, the zoom may stay fully extended. Try cleaning the outside of the lens barrels to make sure there is no dirt on them.
 Then With the camera switched off slide the ‘Zoom lever’ to the left (W) position and hold down the ‘Shutter’ button for a few seconds then switch the camera on. You need to still be holding the ‘Zoom lever’ and ‘Shutter’ button.
This seems to force reset the zoom to minimum extent. Then switch the camera off.
Hopefully the camera is now in its normal closed off position. Switch the camera on and it should be operating normally. If not repeat the above a couple of times.
If this doesn't work, I'm afraid you will likely want to buy a new camera. I'm awfully sorry, and I totally wish I had better news. If you have any questions, please feel free to let me know. If you don't require any further information, I'd greatly appreciate a review of the service I've provided. (I do realize that I may not have given you the news you wanted, but I try to give the correct info)