The first thing anybody's gonna say is "check your wires" - so do that. Triple check them. It really sounds like mostly a wiring problem.
Are you playing your iPod through the USB, through an AV input, or through the input on the front of the unit? Does the volume sound low for this input when compared to the other sources? If you are using the AV inputs, you may have it actually installed into the "Rear Output" RCA plugs. I have seen in home theater systems sometimes if you plug something into the "out" ports it will feed all the way back to the unit as if it were an input. This would also explain why your volume doesn't seem to do anything - because those RCA outputs are very low output and it's regulated internally...
I have no idea regarding your odd touchscreen issue...
Also please let us know which unit you are using.