Hi - I'm not sure why the touch should suddenly stop working, without any physical damage. I noticed the flat cable connecting it being very sensitive to breaking, as it's squeezed between the screen and the board, when the device is assembled. Plugging/unplugging and bending it might have also damaged it even more... It happened to mine already...
I hope it's not the case for yours, but if re-loading the stock 2.3.5 didn't help I'm afraid there's little we can do to fix it.
Do you have a chance to solder a serial console cable, as described here:
https://groups.google.com/forum/#!searchin/renesas-emev-osp/serial/renesas-emev-osp/Se3kmPFCYQA/34NoujunVCQJ