Kevven's suggestion works!

PROBLEM SOLVED!!!
Reason: Failed write error at some point when connected via USB and transferring files.
Solution: Run a checkdisk from your computer.

1. Connect your N900 via USB in MASS STORAGE MODE
2. Open My Computer (in Windows)
3. Right click on either the N900 drive icon or the MICROSD card icon (whichever save directory is causing camera error)
4. Click Properties
5. Click the Tools tab on the top
6. Click Check Now under Error-Checking
7. Make sure 'Automatically fix file system errors' is checked ('Scan for and attempt recovery of bad sectors' checkbox recommended, but not necessary)
8. Click Start

This has nothing to do with Kernels that are riddled with errors or FCam/BlessN900 applications that install bad drivers.