Symptoms. When looking at the images on a computer, the whole image has horizontal lines through it. The lines are approx. 1 px wide and 1 px apart. One line is bright, sometimes near white but mostly still containing image information. The other line contains normal image information. Due to the bright lines, the images make the impression of being overexposed. When looking at the camera's LCD before taking a picture, there are no horizontal lines (but this can be explained with the low zoom level also). However, there are also no bright lines when using the video function of the camera. All of these have been confirmed by me in one case. Other people report that these lines are only present in images taken in bright light conditions, while not present in images taken in darker light conditions.
Tests. In the current case, a Casio Exilim EX-S770 had these symptoms. I first thought that the CCD sensor is bad, so I got a second (working) sensor and a second camera and made some tests. The results were enlightening, as they showed that the error is located in the lens, not the camera's mainboard or CCD sensor. Basically I used the lens of the non-working camera and exchanges everything else in all combinations, and always had the horizontal lines symptoms. Like this:
On a side note, no changes to the combination of original lens and sensor were made when moving it from the original camera (autofocus works) to the replacement camera (autofocus does not work). Which means that a defective autofocus can have a cause on the mainboard (or maybe in missing adjustment settings to a new lens?).
Diagnosis. The mechanical shutter does not work. This can be recognized because there is no shutter noise (disable sounds for that), no shutter movement when triggering a photo and looking into the lens, and because there are no bright horizontal lines in videos (where no mechanical shutter is used). Also, the error could not be fixed by exchanging mainboard or CCD (see the test list), so has to be in the rest of the objective (shutter or aperture).
The diagnosis "defective shutter" for these horizontal line symptoms is given in the mydc.tw knowledge database, including example images (note: automated translation to English!). They also gave me the important hints how to diagnose the defective shutter. The most in-depth discussion, including other possible causes like apterture or (rarely) the CCD indeed, is given in monitor.net.ru thread 138505 (English translation). It seems that Russians are really great electronics hackers – just look at the monitor.net.ru digital camera forum index.
Web search notes. The best Google search keywords are: digital camera "horizontal lines". There are many uneducated forum posts about this topic, where people suggest that it is a faulty memory card, faulty card reader, bad USB cable or faulty CCD sensor. Do not listen to them; there are no reports that these tips did help.