Almost 60% of all questions about touchscreen enabled Toughbooks (CF-18, CF-19, CF-28, CF-29, CF-T2, CF-T4, CF-T5) are about touchscreen driver.

The “PS/2 Compatible Mouse” in Device Manager actually covers both the touchpad and the screen, and appears as a fully functioning device right after a new install of XP – there’s no separate device for the touchscreen itself. You have to replace this default driver with the official one from Panasonic here, unhelpfully and simply called “mouse driver”.

Download the mouse driver, extract all the files (Panasonic’s .exe file won’t run on anything but a compatible Toughbook, but 7zip can extract the files by itself), right-click the mouse in Device Manager and point it to Fidmou.inf instead.

Solution #0 CF18 MK1 Win XP

Download and expand mouse-touchscreen driver for MK1 (CF-18BXXX). Follow driver update procedure described earlier in this guide.

Solution #1 CF-T1/T2/T4 CF-18 MK2 Windows XP

Download Toughbook touchscreen driver package #1. Extract and follow driver update procedure described earlier in this guide.

After update, you might need to calibrate the screen. To start calibration procedure open folder where extracted drivers are located and run application named calvin.

Solution #2 CF-T5/T7, CF-18 MK3/MK4/MK5 Windows XP

Download touchscreen driver package #2 (newer version). Unzip and run ftsetup.exe. Restart computer. Run calibration utility if needed.

Solution #3 CF-18 MK4/MK5 Vindows Vista

Download and extract touchscreen update for Vista.

There are two types of tablet screens: touch screens and active digitizers. Touch screens respond to the touch of your finger or stylus and the cursor jumps to whatever point is touched on the display.  Active digitizers sense the tip of the stylus as it approaches the screen surface and display a pen/mouse cursor.

The advantage of the touch screen is that you can use your finger or any pen device for data input. The disadvantage is that there is no “cursor tracking” which can make it difficult to work with applications where precise cursor placement is needed. The advantage of the active digitizer is that it makes for very precise cursor placement, but if you lose the pen you’re out of luck as the display does not respond to touch of any kind.

This is why Tablet PC manufacturers are now moving to displays that combine both touch and active digitizer capability. These displays are referred to as Dual Mode screens. They work like a touch screen until they sense the proximity of a digitizer stylus. When the stylus approaches, touch input ceases and and the pen cursor starts. When the pen is pulled away, the screen once again responds to touch.

Active digitizers generally appeal to tablet PC users and those who do a lot of inking because of the palm rejection, smoother quality of the ink, and handwriting recognition. It does require a special pen, as you said, which makes it ideal for note-taking and for people who either prefer stylus-based (vs. finger-based) interfaces or hate fingerprints/smudges on their screens.

A passive/resistive digitizer (aka the common touchscreen), while not as good for inking, is more versatile because just about anything can be used to interact with it. This makes it ideal for use in the car (mounted to the dashboard or something), among other places. (Source.)

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Which is best?

If most of your data entry needs involves tapping on a check box or selecting a drop down combo box, a touch screen tablet is sufficient.  If  most of your data entry needs involves text entry via the pen stylus and requires the handwriting recognizer to convert your handwriting to text, then the tablet with the active digitizer is the better choice. (Source.)