Well, that stinks - did Garmin replace theirs under warranty? Should have...
As for condensation, I think that has as much to do with manufacturing conditions as usage conditions. I always wear an absorbent sweatband under my 310XT for comfort, it's never been exposed to anything more than a few sprinkles, and it's supposed to be waterproof to 50m, yet it has condensation under the face when it's cold outside. As long as it keeps working, I'm treating it as a harmless annoyance...