Panasonic dmc-fz5 camera says remove lens cap and press- button even though the lens cap is already off

I posted a solution yesterday on Fixya, but can't find it. Same problem, same camera, solution reached on Feb 10 2009 after a couple days of frustration. I gently wiggled the lens by pushing my fingers one on either side (not the outer ring, but the inner ring, but keep your fingers off the glass part). It moves perhaps a fraction of a millimeter, but it moves. After I did that, the problem went away. It's hard to describe, just a gentle 3 or 4 times push on either side; you may have to change finger positions to get the movement. It apparently only takes this to get the lens back on track. Good luck, it's a great camera. Lee

I had the same problem with a Lumix TZ1.
And this are the instructions to solve it on that camera. But assuming Panasonic build thier camaras similar - yo umigth be able to use it anyways.

When the lens is fully retracted (like if you had a choice!), a silver colored sensor can seen inside the rim. The problem is dirt or moist or something on that sensor.

The camara turned off.
With the edge of some standard printing paper i moved it back and forth, over the sensor a few times.

Turn on the camera. And Zoom.

The first time I could only zoom a little more - but MORE :-) The error message reappeared and the lens auto-retracted. I repreated this several times every time zooming more and more. Sometimes I got the error when retrating the lens, sometimes it got stuck.. But eventually It worked perfectly again.