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Plastic bag != screen protector.
Remember, the touch screen on the TSR is not a capacitive touch screen like on the Nook Color (or iPhone/iPad/Android smartphones/etc). It's IR-based. There are a bunch of IR transmitters and receivers spaced around the inside of the bezel, and when you "touch" with your finger (or pen, or carrot stick, or feather, or ...) it determines the position of the touch based on occlusion of the IR signals.
Your screen "freaked out" because I suspect the plastic bag was not pulled taut. It sagged and dipped, and made the screen think it was being "touched" continuously in multiple places. A normal screen protector would be flat on the screen, below the IR transmissions, and thus shouldn't interfere. Of course it also won't really do much for protecting the rest of the reader.
Try pulling your baggy taut, so that the part over the top of the screen is tight and not sagging anywhere at all. You should no longer have touch issues, but of course you won't be able to use touch that way.
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