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If this is an old camera, then the shutter action may be sticky/sluggish, suggest servicing/repair of shutter mechanism. If the problem is only with this specific lens, then send this lens in for a check-up and service/repair.
Forget the in-pano function and use a free stitching program off the internet. When shooting panoramas, you need to be in aperature priority or manual mode so as to keep the exposure consistant, especially going into the sun or away from it in your pictures. Although this is good practice, it is not needed for a few stitch programs as they average out all the exposures and make the entire pic uniform. This works pretty good in all but the most demanding exposure swings.
What happens if you try to reset the camera back to its factory settings. Does it still overexpose the images? TO reset the camera go to Menu - left arrow to Reset - press Ok - up arrow to Yes and press Ok. The camera will now be back in factory settings. If the images are still overexposed, it may be a repair issue with the image processing functionality.
The Olympus Stylus 300/400 Digital is the first metal-bodied digital camera in the world to feature protection equivalent to IEC Standard publication 529 IPX4. The camera will not be damaged by water splashed from any direction.
The camera can be used outside in adverse weather conditions. If you are taking pictures when the camera is exposed to rain or snow, make sure that the optical components (lens, viewfinder, flash) are not covered with water. Water droplets on the lens may affect image quality.
The Stylus 300/400 Digital is designed to operate at ambient temperature 32°-104°F and relative humidity 30-90%. Please note that the camera is weatherproof, not waterproof, and can not be immersed in water. Olympus will not assume any responsibility for any camera damage caused by water getting inside as a result of misuse by the user.
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