Okay, I'm going to just disable the touch pad and use the touchscreen and a Bluetooth mouse from now on, and anyone who is stumbling upon this post in the future should too. It has only been a month with this new type cover and it's touch pad sucks a**. Excuse my language, that's the only way I'll put it. I have actually encountered three issues with this type cover and Microsoft's Precision touch pad.
The first: no Palm Rejection, and inability to customize sensitivity levels other than 4 predefined options. The type cover is ridiculously sensitive, even on Lowest Sensitivity. I only need to brush my wrist on the pad and all of a sudden the cursor is in the third dimension. Microsoft's Precision touch pad is in DIRE need for a palm reject option especially for their type covers.
And another annoying "feature", A touch pad delay when typing. When you start to type the touch pad will be disabled for a few seconds to prevent accidental cursor movements. There is no way to disable this except for moving the touch pad sensitivity to Most Sensitive. Well, your first issue is solved, but now you have another issue. The touch pad is too sensitive! Microsoft just combined two issues and tried to solve them with one fix. It obviously didn't work, and what I find even more humorous is that in a previous update Microsoft had an option to toggle and touch pad delay and toggle the sensitivity. Currently though they've combined it into one single option, so now no one is happy.
Saved for last, tap dragging. It has been only one day that I used Microsoft's tap twice and drag to multi select feature and I know for a fact they dun f***** up. First off, they nested this function into two other functions that are used CONSTANTLY throughout the user experience. Clicking, and double clicking. Add on top a highly sensitive type cover and you've got mega problems. When I tried to click on something, I would instead be dragging something into the third dimension. OR If I wanted to double click but I moved my cursor too quickly, that file just went into the third dimension. The worst thing about this was there was NO way to customize the sensitivity of this feature, or at least I know of. But Ikai, can't you just physically click with the type cover? Nope. I have been doing that in fact, but with only a month's use the left side of the touch pad has started to sink in. So I am trapped with tapping lightly to prevent destroying the type cover. How sad that a over $100 accessory starts to fall apart in a month's time. Beck on the original subject, tap dragging on Windows is a nightmare. Don't use it. Mac OSX did it better with the three finger drag on their MacBooks. Actually, I am in love with the track pad of the MacBook. Have you ever seen a comparison picture of the Surface type cover touch pad and a modern MacBook track pad? Look it up. The difference in size is astonishing. Sorry to be an apple fanboy, but you cannot deny, those MacBooks had some damn nice trackpads. I'd rather use a MacBook trackpad than any mouse in the world.
So, anyone who is reading this, and has a Surface + Type cover, do yourself a favor and get a portable mouse. I did the hours of googling, the hours of exploring regedit, the hours of exploring windows settings, so that you didn't have to.