Low light shots are tricky with the XZ-1. Have you tried the "Low light" option on the camera? It does better than if you are using auto.
Also, you can manually set the ISO to 100 (usually best) or 200. However, that tends to keep the shutter speed too slow so you end up with soft/blurry pics.
I haven't tried manually setting the ISO as well as the shutter speed. I think you can set the ISO to 100 - then put in S mode and manually set the shutter.
Most people prefer RAW with this camera, but personally I don't have time to do much post-processing. I usually use PSE7 to edit my pics, normally just tweaking them. However, I don't do very large prints, etc, and 8x10 is my limit - you really have to pixel peep at that size to see much difference.
I haven't had much time to try out the XZ-1 so I'm not the expert here! But the above just might work.
Liz



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