It seems to be working alright now. Headphones do work, although touchy. I'll try the "marshmallow" headphones I bought (that you recommended :-) and see perhaps they will fit better. I am in Greece and a replacement would be big trouble to negotiate and send. I'll try using it for awhile and see. The firmware update software didn't work either, but I am hoping that doesn't matter.
You are probably correct, but just too much trouble for me.