Thank you to Nathan from the Tesla Devon Service center. He was able to figure out what is wrong with the touch screen without me going to service appointment. I still had to wait for almost a week to get this solution but nevertheless.
The problem was a USB mouse dongle which was plugged into one of the USB ports in the car. As soon I detached the dongle, the screen was again responsive. I did not even need to restart the screen. Interestingly, I had this dongle plugged in for the longest time and through many software updates and never had a problem. However, the latest update which on the surface did not appear anything special installed some firmware which conflicted with my USB mouse dongle.
I wish there would be some sort of error on the screen to warn the user that there is a conflict or incompatibility.
At the same time, I have asked the Tesla Service if they can upgrade my car with the Autopilot v 2.0 or v 2.5 hardware. This is the second time I asked and I always get the same response that they have no information regarding any available CPU upgrades.
Today, I have also discovered that there might be a new Autopilot v 3.0 hardware coming soon. I am going to again ask the service about this possible upgrade. I guess the reason they are resisting to upgrade the existing cars is due to the risk of hardware incompatibilities and then later support issues but then they might already be dealing with these issues.
Get 5,000 miles (expires May 28) of free Supercharging when you purchase a new Tesla and use my referral code:ts.la/emin9088