The plain answer is that E-O3 is a warning that the cassette take up spindle is not turning properly, or indeed not at all, and because the CPU senses this it shuts down the mechanism to avoid the possibility of a tape getting buckled up.
The slip drive take up mechanism could be contaminated with tape dust depending on what brands of tape you have been using, because with "any" JVC camcorder its not advisable to use any tapes other than JVC - Panasonic or Fuji brands, TDK and Maxell known in service circles to be the source of mechanism faults of the type you are complaining about, with Sony not being far behind.
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