I have the Dell Axim x50 and I had it floating around in my pocket with the Dell case.. My problem was it kept getting misaligned and kept getting worse and I tried reflashing the firmware only to make it worse and have it stuck on the "Align Screen" mode..
I was about to call Dell to see if they would replace it, but I noticed they had a section for aligning the screen. I thought someone may have commented on there about the problem so I looked.
The site suggested that I take the edge of a business card and stick it in the edges of the Axim screen to clear out all the dirt/dust (quoting the site) "This will dislodge any dirt or dust that may disrupt the LCD touchscreen."
I did that, performed a hard reset, and it works! I hope this helps out others like it helped me.
Dell - Support
Journal ID: 07163FG7J4
Article ID: 183514
Date Published: 12/16/2005
Last Revised: 1/23/2007