A friend of mine had a Sainsmart 7" CPLD display, the LCD worked fine, the touch did not. Sainsmart is more trouble than it is worth! Return your display.
Regards,
Graham
Edit: I just read your original (long) post, you have had quite a time of it! My advice stands, return the display and get a CTE display, that will resolve ALL of your current problems. It is annoying/amusing/frustrating the number of newbies that end up in these forums AFTER they bought some Sainshit product or other.... And all to save a few dollars (28th Jan price on ebay.com $69.98 inc p&p for CTE or $63.99 for Sainsmart CPLD 7") all this time and effort is simply not worth your $6!