touch sensitivity on and off after water damage

Water leaves lots of nasty stuff behind which causes corrosion over time. Think about a car battery and how the terminals grow green stuff over time. Without a proper water damage recovery service from a shop you will have long lasting effects from the water damage. Chances are that this was so long ago that the corrosion has caused permanent damage to either the connector where the LCD and Digitizer attach or the touch IC has been compromised. Take it to a shop and have it cleaned properly which includes removing the EMI shields, and possible replacing a few components.