Replaced Digitizer; bottom screen still won't work

[UltraFast]

I bought my wife a 2G phone. She doesnt care about all "that G stuff" she just wanted a phone and music in one package.
Anyway, The phone works great except the bottom of the screen doesn't register touch. After extensive searching I replaced the digitizer. Still same problem.. I did notice one thing is that on the lock screen it works fine, I slide the arrow over no problem. When it leaves that screen is when the bottom doesn't work. I've come to think it's a software issue not a hardware. It currently has 3.1.3 JB'd with Redsnow .9.4 and unlocked. Anyone else had or heard of this problem?

[Goof]

If you think its a software issue, do a restore then re-jailbreak and unlock. See if that fixes it. If not, then its a hardware issue.

[UltraFast]

I did that 4 times so far. Why I keep thinking its a software/conflict issue is because the lower screen works perfectly while on the lock screen. On the home screen, the lowest icons (where Mail, Safari, Ipod is where the problem exists. Right behind those icons is a background, along the top line of the background is the dividing line between working touch screen or non working touch screen.
I tried downgrading to 3.1.2 only with same results. In between Jailbreaks on the emergency screen I slid the arrow over and all is good, but, when the keypad pops up the lower part of the screen seizes to work again. I have spent hours of research on this looking for a fix.