Just bought my wife a reconditioned Olympus 565 directly from the Olympus store. Camera has great 20x optical zoom and a ton of features and most reviews are great.

Our issue is... with the camera set on AUTO and the image stabilization engaged we are still getting some blurry images. This bluriness gets worse when you use the red eye reduction or use the optical zoom. This condition improves when I change to the SCN (scene setting) and engage the "sports" choice. We are amatures and a little frustrated. Could there be an issue with the camera or maybe some simple adjustments need to be made?

If you have literally 'just' bought it - take it back to the shop and insist they fix it or replace it with one that works. The camera was only released in (I think) October 2008 so it would worry me that something that recent should have to be reconditioned.