Screen not responding to touch but works fully with keys, why?

The touch screen on my xperia mini pro sk17i has stopped responding when touched but works fully through keys and arrows. Only the home key works on the front screen by touch.

Have reset to factory and updated all software. Looked at loads of methods like changing to airplane mode and in service repair on phone.

Was quoted over £60 to repair in a shop.

Is there any other codes or tips as it could be software related?