Motorola Xoom :: WiFi Loses Touch Connection?

I've recently had issues with my Xoom where it often loses touch connection. When I touch and drag it suddenly acts as if I lifted my finger when I did not. It's almost like something is interrupting the touch. I've tried uninstalling everything, doing a restore, stopping services, restarting the tablet, but none of it has worked.This does not happen all the time, but happens often, most often when I first turn the tablet on or when I've been using it a long time. Imagine playing Angry Birds and having the bird fling itself when you've just started pulling back the sling shot. It's quite frustrating. Kidding aside it affects other applications as well. For example I can no longer draw dependably since my lines end up cutting off at unexpected moments.

My screen also has some kind of strange oily stuff under it when I press it. I thought these issues were due to my screen protector so I took it off, but the issues continue. It's been getting worse to the point where sometimes it does not go away for a while. Eventually the oily stuff disappears but when I touch the screen it comes back.