A&D ointment in iphone ports. What to do?

You could try carefully cleaning the ports with an electronic contact cleaner and a foam swab (both available from most electronics supply retailers including Radio Shack). That might get enough of the oinment out to keep the iPhone working. Otherwise, Apple will have to exchange it, for which they'll probably charge a fee since this isn't a warranty issue, though people have reported that Apple in some cases makes an exception.

Good luck.

Glad they were willing to make an exception for you. Cheers.