Why the touch screen doesn't work after replacement

Try this reset:

Step 1:

Hold down the ‘power down’ button until the turn off slide appears at the top of the screen, and then turn off the iPod (see illustration).

Step 2:

Then simultaneously hold down the ‘home button’ and the ‘power down’ button until the Apple logo appears. Once the Apple logo appears you can stop pushing the buttons and hopefully your iPod Touch should be working again. If not, please see the following steps.

Step 3:

Reinstall iTunes on your computer with the latest version (even if you already have the latest version). You only have to do this if when you connect your iPod Touch to the computer and it is not found by iTunes to let you ‘restore’ factory settings.

Step 4:

Once you have reinstalled iTunes on your computer, start up iTunes and plug the USB cable into your computer. Then you need to hold down the ‘home button’ on your iPod Touch while you plug in the cable connector to your iPod Touch. After that you simultaneously hold down the ‘home button’ and the ‘power button’ on the iPod Touch until a message appears in iTunes asking you if you want to restore factory settings. Say yes to that and then iTunes will do the rest for you. Unfortunately this means that you will have to re-sync your iPod Touch completely with all content again once it has been restored.