When playing back recent photos on my Olympus Stylus 810, the photos are distorted with horizontal lines. Older photos which are stored in the camera, playback perfectly. The most prominent horizontal line is in the center of the screen.

The problem you are describing is a problem with one of the chips in the camera that controls image processing. It seems to have failed and needs to be replaced. Following are the instructions to send your camera to Olympus for service.

http://olympusamerica.com/cpg_section/cpg_servicerepair.asp

Olympus will charge a flat rate repair fee for this product if beyond the one year factory warranty or the warranty is voided. The cost is $156 plus your local sales tax. This covers parts and labor, factory cleaning and diagnostic check, 6 month warranty and the cost of shipping the product back to you is all included in that price.