I had the exact same problem. It was my first attempt at a repair, so I did a ton of work that was not necessary. Long story short, it was a simple fix.
The small wifi sub-board went bad. swapped it with another and all the symptoms went away.
Again, the exact same problem as you - camera works, can't load any application (system settings, insert game, pictochat) or the same error you posted occurs. If that wasn't the problem, I'd be surprised.