Well, I have done some more research and I have discovered that the Xenarc 700IDT is not eGalax compatible. For some reason Xenarc decided to use a different TS controller in this model.
The USB touchscreen controller is made by a company called Liyitouch. There are a set of pre-compiled drivers that come on the CD with this touchscreen for RH9, Mandrake 9, and Mandrake 10. If you are not using those distros or have a custom kernel you are kinda SOL (at least as far as vendor CD supplied drivers go). I am running Debian "sarge" which puts me in the SOL category.
So, after a bit more googling I came across a very interesting company called Touch-Base. http://www.touch-base.com TouchBase makes specialized drivers for all kinds of pointing devices.
While looking at what they do I came across a Linux driver for the liyitouch controller available from them! It looks like this company is building off of the java driver interface (not the technical name) and has a full suite of calibration tools and support for their drivers. The downside, you have to buy it from them. I will be purchasing a driver from this company since I don't have any choice with my 700IDT on Debian right now.
So hopefully we can get some people together and get some drivers from Xenarc/Liyitouch for the other versions of linux. Let me know if you are planning to purchase one of these unit for use with Linux and I will probably be able to help you get it going.
Well, I got my request back from TouchBase regarding the Liyitouch driver for the 700IDT in linux. $190 US!!!! wth, I can almost buy a new touchscreen that would run the egalax driver for this price!?!
I got my Xenarc 700IDT back from Xenarc RMA. It only took 3 days to return which was really cool. My original 700IDT was also replaced by a new one. To my surprise this new unit has a different touchscreen controller. This new unit is using a
controller on the eGalax driver.
I was able to get my debian system running in a couple of hours. I did not even have to touch the kernel or compile a thing.
Well it looks like xenarc has fixed the 700IDT and it is now using a much more Linux-friendly touchscreen controller. in my discussions about the Liyitouch linux driver from Touch-Base they would sell me a single end-user license for $95. I am really glad that I dont have to pay this now.
So, the answer is: Yes the Xenarc 700IDT works in Linux. if you are using a distro other than RedHat and Mandrake make sure you get a model with the eGalax controller.