Its on demo mode. When you open it up there are two switches inside, on the head; one controls the volume, the other is power. There should be a plastic pull tab on the power side that will stop it from playing the demo, if you don't see it open the battery compartment, it might have broken off. Once the tab is removed it will play normally.
the problem has NOT been fixed, and that's not true about fisher price recalling it "if it had been really bad". companies do a cost/benefit analysis. Simply read all the people who have had this product catch fire and see if you'd consider that a "bad" problem.