I'm a bit late to the party here but wanted to comment on my research. I've got a phone that had a faulty touchscreen when I bought it used off of eBay (known to me). I bought a new panel (lcd/digitizer/frame combo). It worked immediately upon connecting the panel to the flex cable socket, before even disassembling the phone. All I did was disconnect the flex cable for the "bad" screen and plug in the new one, and the new one worked: showed display, touch worked, even double-tap wake worked. When I did remove the old panel and install the new one, the touch wasn't working. I fiddled with the display connector, a few of those little springy pins on the board, put it back together, voila, working. That got me a few days, then it wasn't working again, at first intermittent, fixable by squeezing, pinching, flexing a tad, now it's not at all. Display has worked fine the entire time, which is to say I can see what I cannot touch.
So, given that when I tried out the new panel it worked when just connected by the ribbon cable, I figured I would try that same thing with a couple of spare 1520 displays I have, both with known good digitizers. Wouldn't you know it, both of them worked just fine when just connecting them to the flex cable socket, leaving the other panel with the motherboard and accessories still attached to it. I have yet to try installing either of these spare screens properly to see if they'll work. If they do, of course, it would mean the problem with touch not working would be isolated to the lcd/digitizer/frame assembly, by deduction. I do intend to try out installing one of these spare displays properly to see if it works normally. Is that of interest to anyone, or is this a dead thread at this point?
There is the possibility that the motherboard or some other component is actually harming the digitizer when used consistently and not just to test it momentarily. If that were so I'll find out after keeping one of the spare displays installed for a while. This of course would be the worst-case scenario, which is to say that not only is the digitizer in your phone broken, but the motherboard or something else caused it to break and therefore replacing the display won't help you for very long. These displays go for about $100, so it's not a cheap theory to test.
As an aside, I tried the heat-up-the-screen fix, kept it at 150F for about 2 minutes, didn't affect things in any noticeable way. Perhaps closer to 180F was necessary but I don't feel like cooking the LCD accidentally just yet.
EDIT: I decided to fire up the phone with the display that "lost its touch" after buying/installing it, to see if what others mentioned was a factor here: Whether a cold start would refresh it, which is to say starting the phone after it's been off for a while, completely cooled-off internally. Touch worked. The phone wasn't responding to anything the last time I tested it very thoroughly, including prodding connectors, disconnecting and reconnecting every flex cable, adjusting pins, nothing would get it to recognize touch. Then after simply reconnecting flex cables and firing it up, it worked.
After swiping around a bit and tapping a few things, including the capacitive buttons, to see that everything was OK, I just left it running for a few minutes, then checked it again. Touch was not working properly. First it registered a swipe as a long-tap (hold), then it wasn't picking up touches at all, then only on the capacitive button area, then intermittently everywhere. Something about being on for a while is affecting touch. I say this because the phone is sitting on a neoprene pad, not moving, as I test it, and it goes from working to not.
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