I had more or less the same problem but also my camera would not launch with the back cover on. Had to send it to Nokia who had it for about 10 days and sent me a replacement which is all good.
Yeah, I am starting to get that feeling that it is a hardware problem . I was hoping that there is some diagnostics I can do to get confirmation of this. When connected to a windows machine, both drives come up under Mass Storage Mode, but it says to insert disk into drive for the external SD card slot drive letter.