The Panorama scene in the E-420 requires an Olympus xD-Picture Card memory card to function. Why is this so?
It seems an artificially created limitation just to sell some more vendor-specific hardware, but I guess there's some technical reason for not using standard SD cards.
From the website you linked,
the images are "tagged" with information that the bundled OLYMPUS Master software uses to Auto-Stitch the images together into an almost seamless single image. There is software in the Olympus xD-Picture Card media that is part of the data algorithms the camera uses to save the images to the card as elements in a panoramic image.
Given the above comment, it seems that XD cards have "software", probably a micro controller, to do all that within the card. I can't see why they can't put that in the camera body as many other brands, then and now have done so already.
In theory there shouldn't be any limitations as I have an a6000 and can do panoramic shots on it. Similarly older Point & Shoots I used by Canon have no problems at all.
I doubt, unless proven differently by analyses of the cards, that a xD card can have embedded software so powerful to perform the stitching, not to mention that different cameras may have different lenses and therefore the algorithms would need to be different.
Also, what about xD cards older than the camera itself? would they work? did they have already the software inside? not probable.
It's probably marketing, to sell more xD cards.
As stated above, an artificial limitation to bolster support for a format that nobody loved (too small, too slow, too expensive). If panoramas are your thing, I would suggest the following: Take individual, overlapping shots (about 25-50% is good) and stitch them yourself using something like Microsoft's Image Composition Editor (free download). Easy to use, fast, and the results will be far superior (and much larger) to any in-camera panorama.
