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I've only ever see such jagged lines on image display on physically damaged LCD's and eInk panels. IMHO it is almost impossible that it is a firmware issue.
Most likely you have a crack on the panel, that may not be visible on the surface.
To me it seems the staff at Borders honestly don't have a clue at what they are talking about, which in this case may be a good thing. Good because you can probably convince them to exchange it, where physical damage is usually not covered under warranty.
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