After researching this problem, all I could find out is that the error occurs when the camera doesn't respond and initialize correctly. One person had an estimate of between $80 - $100, and another was quoted $135, and they had it fixed...and Kodac changed out the main circuit board to fix it.
There are mainly two things that cause a camera not to initialize correctly: a power problem (low battery, etc.) and a stuck lens.
There are a couple of good websites I found that describe what you can try to fix these problems, and here they are:
http://camerarepair.blogspot.com/2007/12/fixing-lens-error-on-digital-camera.html
and:
http://camerarepair.blogspot.com/2007/12/fixing-lens-error-on-digital-camera.html
This last blog is titled "lens error", but applies also to "stuck" lens issues.
I would try the suggestions in those blogs- they say about half the cameras can be fixed trying their suggestions.
Wish I had better news- a lot of people have had problems with this issue.
Good luck, though, and hope this helps, and thanks for using FixYa.