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I am not a consumer rights lawyer but it seems to me clear that;-
1/ under the sale of goods act Waterstones are responsible for the replacement / repair of defective products sold by them. You must prove that you bought the goods from them and when.
The sale of goods act allows for a period of up to six years from date of purchase that they were of 'merchantable quality'.
They may choose to place the onus on you to prove you did not cause the defect by either modifying the product or by damage.
By returning the goods to you without reasonable explanation they could be seen to be in breach of their responsibilities under the act.
2/ you said you bought the goods using a credit card. Under the consumer credit act the card provider is jointly and summillary responsible with the retailer.
You should advise the card provider at once of your grievance and that you hold them responsible with the retailer.
Faced with the wrath of Visa or Mastercard the retailer will normally honour their responsibilities without further argument.
3/ download the templates as suggested by Harry, just reading them explains the relevent laws better than I.
Speak to, or better still visit your local Citizens advice bureau and The trading standards office. If they feel a serious breach of the consumer laws has occurred they will take the case for you.
Let me say I am not a disgruntled Waterstone's employee, just a very disgruntled ex customer.
Both Sony and Waterstones read this forum, along with the public at large, and I am surprised they are allowing this thread to continue un answered.
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