Plug it into a TV and test the touchscreen. Im fairly certain its just the lcd panel that needs replacing. I replaced mine easily enough. Do a youtube search for tehkseven n900. He has a complete teardown video for N900. Getting to the LCD is actually really easy, you will only need the first half of the video.

I bought a new lcd panel on ebay for $AU 80.

work in a dust free environment if possible, and careful to not put fingerprints anywhere.