Chosen Solution

I’ve uploaded a short video to Youtube which shows my problem perfectly http://www.youtube.com/watch?v=bqTH71Fwx

I watched your film about 10 times. I don’t believe that the problem is with the touchscreen/digitizer. I believe the problem is with your D pad (directional pad) on the left side of the system. Continue disassembling the DSi till you can get to the rubber pads below the buttons on the deck. Make sure the rubber underneath the D pad is in good order, that it is moving freely and that no parts of it are sticking into place. Clean the contacts on the motherboard that the rubber hits with Isopropyl Alcohol. Dry it off. Reassemble and try it.