It will force you to eject if some sensor isn't reading appropriately and probably also why it doesn't think there's a tape in it (the tape crossed out icon). Not sure why it only cares about it when in playback mode though. Assuming the mechanism actually loads appropriately and you see the guides move to the end of their path upon loading, the fix you "hope for" is just needing to reseat all of the internal ribbon connectors that go to the main board from the deck. Those ribbon cables are rather fragile, so if you aren't comfortable doing that, then then it's probably not something you want to attempt yourself unless you are otherwise going to scrap the camera.
There's a guy on ebay that will fix any 8mm Sony camera for something like $75 which is probably much cheaper than trying to hunt someone else down to do it that is reliable. I believe he has a bunch of spare cameras and his feedback suggests he knows what he's doing.
I've bought something like 10 Hi8/D8 cameras for parts on ebay in the last several months and I'm only able to get them working probably about 50% of the time. This other guy must have a lot more experience and enough spare parts to offer such a reasonably priced service.
Link to the refurbishing listing is here:
https://www.ebay.com/itm/363656810607
The listing mostly talks about servicing the mechanism, so I don't know what he does if the issue turns out to be a "non-mechanism" problem such as the camera not powering on at all...
