Hello Ivan Wilson,
Welcome to Microsoft Community.
If the issue is related to Surface-me, then the issue may indeed involve the firmware of the Surface.
I notice that you have used the Surface Diagnostic Toolkit (SDT), so after running the SDT, you did not see any diagnostic recommendations?
Please allow me to provide you directly with driver and firmware package for the Surface Laptop 3:
Download drivers and firmware for Surface - Microsoft Support
Download and install it manually, restart your Surface Laptop 3 after the installation is complete, and then confirm that the touch screen is back to normal.
Can you clarify here how you connect the external display to your Surface Laptop 3? With a Surface Dock? Or with a third-party USB-C adapter or docking station?
At present, we have received feedback from some users, saying that the third-party docking Dock and USB-C adapter that could have worked are no longer available after installing the Windows update, but the Surface Dock and the official cable are not affected, so I just make a suggestion here. You may want to use Surface dedicated docking stations and cables, because they have better compatibility and stability than third-party docking stations:
Buy Microsoft Surface Dock 2 – Microsoft Surface****
Buy Surface Thunderbolt™ 4 Dock (Ports, Compatibility, Price) - Microsoft Store
Accessories Designed for Surface (microsoft.com)
Best Regards,
Mitchell | Microsoft Community Support Specialist