How about posting a "grossly distorted picture". I have no idea what you are talking about. Steve doesn't do anything special in his sample shots and they don't look distorted at all. There are also shots up on pbase from 550s that look fine.
Take shots at various zooms in bright sunlight. If the images don't have the kind of gross distortion you are referring to there isn't a problem with the camera. If you still get this distortion in bright sunlight post some images – the camera could have a problem.
The lens is f4.6 at 5X zoom and that doesn't let you shoot in low light without the flash and within flash range or with a tripod or brace of some sort. By low light I'm referring to "in the woods" kind of low light. You can forget indoors without flash or tripod.
My guess is that all three of your problems are the same. You are shooting in limited light at full zoom and expecting good photos. Your 5X zoom is equivalent to about 188mm. If you are really good at holding the camera you can shoot at 1/150 second at 5x and get sharp pictures. That is a little slower that an experienced pro would consider sufficient but I'm giving credit here for your being really good at steadying the camera.
1/150 sec at f4.6 and ISO 50 or 100 requires very good light. Set the camera on ISO 100, zoom full out and take a look in the LCD at the shutter speeds you generate when aiming at various targets outdoors in the shade. If you don't view the images 100% or crop or print larger than 8 X 10 you could probably get away with 1/100 sec if you really work at steadying the camera. But the camera is trying to stick with the reciprocal of the focal length rule to give you 1/188 second shutter speeds. Once the lens is open to the full f4.6 it has no choice but to increase the ISO if you left it on auto. That gives noisy pictures. Limit the ISO or shoot in light too low for the ISO to give a decent shutter speed and you get motion blur in your shots.
Focus for indoor flash shots is a problem with most small cameras without a focus assist light. Try focusing on something the same distance with brighter light or better contrast. When you pre-focus by holding the shutter halfway you also hold the exposure, but with a flash shot the difference in the ambient light won't really affect the shot. Or put the camera in manual focus and use the scale to set the right distance. I don't have much luck using a LCD image to do fine focus even with LCD zoom, but maybe your near vision is better than mine.