I did something similar - with less than perfect success.
My Barco 808 is driven from the VGA output from an ATI 9600. Then I added a 7" Xenarc touch-screen driven from the DVI ouput of the 9600 using a DVI/VGA adaptor. I also ran a USB 2.0 cable to the touch-screen to carry the pointer-clicks.
While I'd like to have the Barco be the secondary, extended display and run only the video overlay there, the ATI driver seems to insist on putting the overlay on the primary display.
So, I don't run an extended desktop, I just let the 2 displays mirror each other. This way I can mess with my music collection, photos, random web stuff, etc. without turning on the projector. Then when I run video applications that use the overlay (dscaler and theatertek), the touch-screen blanks out and I turn on the projector.
Not bad. Also not perfect. The 1024X768 that I use for the Barco (4X3, 92" wide screen) is not great for the xenarc, which is a little small for that resolution and also is 1.78 aspect ratio. Also sometimes it would be nice to be able to use the touch-screen while the video overlay is in use.
One nice thing is that since I added a USB hub to plug the touch-screen into, it was easy to also add a DVD-ROM/CD-RW drive connected to the same hub. Now that drive is the base that the touch-screen sits on and I play CDs and DVDs from there.
Rick