What's wrong - I'm at a loss. I've cleaned everything and done a carriage positioning reset etc etc - but nothing makes any difference. Is the machine broken or can it be fixed?
A RESULT.
Many thanks to the people who pointed me in the direction of a Youtube video on how to fix this problem by installing a small switch in the carriage positioning circuit. The switch cost less than £3 and the repair took me 15 minutes (thankfully I had a soldering iron).
OK - so it takes a manual intervention (press the switch button) when starting the Silhouette Cameo but it's much better than chucking the machine in the trash or sending it back to the supplier and paying an enormous fee.

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