it's easy to understand if it's a software issue: just run a live Linux (like Ubuntu Live) and check. If the issue is the same on another OS, it's a hardware issue for sure.
Tests are useless. Better do this: start your PC and open device manager. Under "mouse" or "human interface devices" you will find the touch screen driver. If this driver disappears after touch stops working (or gives an error with a yellow triangle and an exclamation mark) , then most likely it's an hardware issue.
Generally this is an hardware issue that can be resolved only by replacing the LCD panel (at Dell, touch displays come hinge-up, so they will replace the entire LID).
Have a nice day