Hi akard,
Slow down a bit!! Try to get only one function working first, then the next, then the next.
From the picture of the kit you provided on ebay, the flash ic appears to be absent, indeed I understand it to be a little 'hit and miss' as to whether you have the ic or not. You can check, look if there is an ic soldered on the 8 pin pad at the side of the SD cage on the rear of TFT.
By defualt, the SD socket on the CTE shield is not enabled. Please see technical info quoted from CTE_DUE_shield.zip/DUE_Shield_readme.txt.
CTE TFT/SD shield for arduino DUE
coldtears electronics
http://www.coldtears.com/electronics
This shield is created for arduino DUE, which fit two types of LCD:
- 40pin version LCD which is commonly used in previous version of TFT Mega shield for Arduino MEGA 2560
- 32pin version LCD which is commonly used in STM32 development board.
There is a SD slot and a Font IC (SPI flash) footprint, for upgrade to include Font IC to draw text to the LCD. These two features are created to support LCD modules which do not have SD slot or font IC.
To use with UTFT library:
1.uncomment "#define CTE_DUE_SHIELD 1" in the HW_ARM_defines.h in the \hardware\arm folder of the UTFT library
2.Change the pinout to : UTFT myGLCD(CTE50,25,26,27,28);
Using the Touch function:
Remember to change the touch initialization to the following if it does not work.
The TP DataIN is routed to pin 32 of arduino DUE instead of 4.
(Because pin4 of arduino is a hardware SPI CS pin, which is reserved for SPI device)
Shipping default jumper configuration:
The TFT/SD Shield for arduino DUE is shipped with the following jumper config, if you use TFT modules in our store, you do not need to reconfig the jumpers.
LCD Vcc - 3.3V (JP2 shorted)
LCD backlight (LEDA+) - 3.3V (JP4 shorted)
arduino Pin32 to TP_DIN (JP10 opened)
On board SD - disabled (JP8 opened)
First of all, it can be seen that to use the SD socket on your CTE Shield, you need to bridge JP8 with a blob of solder.
Then you will need Henning Karlsen's libraries :-
tinyFAT Electronics - Henning Karlsen
and
UTFT_tinyFAT Electronics - Henning Karlsen
I don't wish to hold your hand do this for you, but the common pitfalls with tinyFAT are SD card MUST be 2GB or less, formatted as FAT16, and filenames MUST be 8.3 old style dos names ie:- myimage1.raw
Henning says
The library supports FAT16 formatted SD cards up to 2GB in size. 4GB FAT16 formatted SD cards does not work. Long filenames are not supported. Keep your filenames compliant with the old 8.3 standard.
Be warned!! tinyFAT and UTFT_tinyFAT take some doing to get working successfuly, as there are just so many variables. SPI Speed can be a big issue with several newer SD cards and quality of level shifters if required.
Once you have the tinfyFAT working............UTFT_tinyFAT is easy 
myFiles.LoadBitmap(xcoord, ycoord, xsize, ysize, "myimage1.raw", (rotateangle [optional]));
myFiles.LoadBitmap(xcoord, ycoord, xsize, ysize, "myimage1.raw");
The touchscreen size issue, I am aware of but not familiar with, as I do not have the SD1963 version of this display, mine is the CPLD version, I suspect I am not able to assist you further.
If you wish to post back your experiences based on my suggestions, feel free, I just thought I would try to help you since nobody else replied so far!!
Also, as a final comment, maybe worth mentioning some people have had problems with the 7" displays if you are relying completely on USB power, you should also use external wall power adaptor (9V 1A).
Regards,
Graham