I know this was asked a while back, but figured I would post this in case people are still searching for a solution. I needed to disable the touch cursor in a kiosk-type setting so as not to distract from the running application.
Open the registry editor (open start menu, type "regedit" in the search bar, hit enter) and navigate to:
Computer\HKEY_CURRENT_USER\Software\Microsoft\Wisp\Pen\SysEventParameters
There is an entry called "UICursorMode", change it's value to 0. (Right-click, choose "Modify", change "Value data" to 0, click ok) Close the registry editor and restart the computer.
At this point whenever you touch the screen it places the mouse cursor right where you touched instead of displaying the small diamond cursor. In my application I did not need users interacting with the mouse cursor at all so I replaced the standard Windows mouse cursor with an invisible one, and at that point everything looks just like it would using a standard tablet.
This may not be satisfactory to everyone who might need both touch and a mouse cursor, but it is the best I have been able to find so far.
Hope this helps!
To my knowledge, there is not a single system setting that allows you to disable the touch input cursor. You could write an application that hides the cursor entirely on touch input, but that is quite an undertaking. Another option might be to locate the module containing the cursor resource and replacing that. However, that module is likely digitally signed and will no longer be loaded by the system when tampered with. – IInspectable – 2015-03-12T18:23:14.747