Heres the EXIF:
Camera Make: OLYMPUS IMAGING CORP.
Camera Model: E-500
Image Date: 2008:07:31 21:02:28
Flash Used: Yes (Manual)
Focal Length: 65.0mm
Exposure Time: 0.0080 s (1/125)
Aperture: f/3.9
ISO equiv: 400
White Balance: Manual
Metering Mode: Matrix
Exposure: program (Auto)
The probably is probably that the shot was taken in Auto mode and it's just not getting enough light, even with the external flash. You could take a flash shot of a completely white room in full daylight and the photo will come out dark if the aperture and shutter speed aren't right.
The graininess is coming from the high ISO setting. Try setting that at 200 or lower.
Try one of the night modes your camera offers. Better yet, use one of the more manual modes so you have more control and aren't at the mercy of the camera.
Was this taken with the ZUIKO lens that came with the camera? If so, you've the aperture as almost wide as it will go, not much you can do there (short of getting another lens capable of a lower f value). Make sure the flash isn't pointing up if the ceilings are tall in that room. Also 1/125s is a pretty fast shutter speed.
Try Shutter Priority mode, the camera will naturally go to f3.5, ISO 200, and try a longer shutter speed, something like 1/60 or 1/30 and see how it looks. If you subjects aren't moving much, the slower shutter will be fine, if they are animated types, you'll be stuck with a faster shutter speed. Experiment before you need to take the pictures.
There are 3 factors that control how dark a photo is, shutter speed, aperture, and ISO.
- The slower the shutter, the less light gets to the sensor, the darker the photo.
- The higher the aperture (the f settings mentioned above), the smaller the opening light has to get through in the lens. There is some good info here on this confusing subject
- The higher the ISO the more light sensitive the sensor the sensor (or film in the oldern days) is but granier the result will be. This is less more of an issue with consumer cameras than pro level cameras.
So it's a balancing act between these 3 settings. Your camera is smart and probably does a pretty good job in auto mode 99% of the time. It's just not cutting it here. Maybe there's some other light source in the room that's throwing it off. Also make sure you let the camera figure out the right settings for the shot you are about to take, press the shutter halfway and let it adjust before taking the shot.
The best advice is to get out the manual and learn about the 3 settings above and get comfortable with the manual and priority modes. If you take photos indoors in low light a lot, you might consider adding a f2.X lens, other Olympus owners may have some suggestions there.