I had a similar screen problem and experience with Sony repair. You can read about it in
THIS THREAD. Basically it was maybe 32 days old (just outside the Best Buy return window) when my screen started with the same symptoms. I never dropped it or abused it in any way. It happened overnight sitting on a table. Sony Repair wanted the full purchase price to repair it. I tried hard to convince them that this was crazy, but they just continued to insist that I must have damaged it. They eventually sent it back even though I never agreed to give up.
I was really steamed, but decided to try something positive before I went postal. I hunted around the Sony website and discovered a pattern for their email addresses. I found the name of the Director for the bookreader program and wrote her a note. I told her how much I loved my reader and careful I was with it. I told her that I really wanted it repaired at a reasonable price. I got a call-back the next day and they said that a new bookreader was on the way to me no charge.
I hope you are successful as well,
PCH
I found her name - not sure if she is still in charge, but you could figure out who is currently in charge from the corporate website.
From late 2007 -
Valerie.Motis@am.sony.com