I assume you have an SD card. If it's bigger than 2GB then it's actually an SDHC card and will not work in the ZD710.
No, there doesn't seem to be anything wrong. The card just needs to be formatted. In any mode press the Menu button. Press right-arrow to select the Setup tab (camera and wrench) then press OK. Press up/down-arrow to select "Format" then press OK.
Make sure you format the memory card. It's okay to format the internal memory, of course, but your current problem appears to be that the card needs to be formatted.
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