If the startup script works to enable wifi, you could use the same mechanism to try and remove root:
Code:
#!/mnt/secure/su /bin/sh
iv2sh SetActiveTask `pidof bookshelf.app` 0
chattr -i /mnt/secure/su /mnt/secure/runonce/*.sh
rm -rf /mnt/secure/su /mnt/secure/runonce/*.sh /mnt/secure/bin /mnt/secure/etc
settings=/mnt/ext1/system/config/settings/settings.json
rm -f $settings
mv -f $settings.old $settings
/sbin/reboot
rm $0
Save above code as something like:
/mnt/ext1/system/init.d/rm_root.sh
Restart device to run script.
Try the firmware flash procedure again.
NOTE: If it does remove root, you will lose the startup script functionality and ssh etc (until jailbreak can be reapplied). But from what other users have mentioned, removing root then flashing the firmware fixed the touchscreen issue for them. So proceed at your peril! Good luck.