I am afraid you have the notorious lens stuck problem. If you google "canon lens stuck" or "canon lens not retracing" the results will be in millions. Canon's quote for repairing this issue is well over the cost of the camera itself. However all is not lost. It may be just dust. You can try to clean the lens contacts with isopropyl alcohol and see if resolves the issue. I have previously suggested placing the camera lens on the edge of the table and hit it with moderate force to force the lens back into the slot and I was surprised to know it worked for a lot of people!
http://www.fixya.com/support/t240817-camera_error_e45
Might be worth a try after getting a quote from canon?
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