I got that very same problem with a 3635. It happened that I used one
of those screen protectors and after a while it got all scratched and
glue got undone, so I decided to remove it.

Removing it left particles traped around the screen frame causing the
touchpad to go crazy... $50 and a quick trip to Compaq fixed it 2 years
ago...

Regards
Enrique

Dan wrote:
I've had two iPAQ 37xx series go on the blink.
The touch screen goes haywire.
When I try to re align the screen it just goes into a do-loop and never
properly re-sets.
Sometimes it gets better if I keep it turned off for a few weeks, but
that doesn't seem to work now.

Any suggestions?