diff --git a/src/spice2x/misc/wintouchemu.cpp b/src/spice2x/misc/wintouchemu.cpp
index 8b1eb42..a34a043 100644
--- a/src/spice2x/misc/wintouchemu.cpp
+++ b/src/spice2x/misc/wintouchemu.cpp
@@ -495,6 +495,14 @@ namespace wintouchemu {
         if (hWnd != nullptr && USE_MOUSE) {
             bool button_pressed = get_async_primary_mouse();
 
+            // while the subscreen overlay cannot accept the mouse, treat the button as
+            // released; this ends any active touch and prevents new mouse touch contacts
+            if (overlay::OVERLAY &&
+                overlay::OVERLAY->has_subscreen_touch_transform() &&
+                !overlay::OVERLAY->accepts_subscreen_mouse_input()) {
+                button_pressed = false;
+            }
+
             // if there was a touch event in the last 500 ms, don't insert new button presses
             if (button_pressed && (now - last_touch_event) < 500) {
                 button_pressed = false;
diff --git a/src/spice2x/overlay/overlay.cpp b/src/spice2x/overlay/overlay.cpp
index f0af959..79b5d6c 100644
--- a/src/spice2x/overlay/overlay.cpp
+++ b/src/spice2x/overlay/overlay.cpp
@@ -908,6 +908,17 @@ bool overlay::SpiceOverlay::get_active() {
     return this->active;
 }
 
+bool overlay::SpiceOverlay::is_subscreen_overlay_visible() {
+    return this->get_active() &&
+        this->window_sub != nullptr &&
+        this->window_sub->get_active();
+}
+
+bool overlay::SpiceOverlay::accepts_subscreen_mouse_input() {
+    return this->is_subscreen_overlay_visible() &&
+        this->window_sub->is_mouse_hovered();
+}
+
 bool overlay::SpiceOverlay::has_focus() {
     return this->get_active() && ImGui::IsWindowFocused(ImGuiFocusedFlags_AnyWindow);
 }
diff --git a/src/spice2x/overlay/overlay.h b/src/spice2x/overlay/overlay.h
index a1265c7..ef6f15f 100644
--- a/src/spice2x/overlay/overlay.h
+++ b/src/spice2x/overlay/overlay.h
@@ -109,6 +109,7 @@ namespace overlay {
         void show_main_menu();
         void set_active(bool active);
         bool get_active();
+        bool accepts_subscreen_mouse_input();
         bool has_focus();
         bool hotkeys_triggered();
 
@@ -143,20 +144,20 @@ namespace overlay {
             return this->hWnd;
         }
 
-        bool can_transform_touch_input() {
-            return (this->subscreen_mouse_handler != nullptr);
+        bool has_subscreen_touch_transform() {
+            return (this->subscreen_touch_transform != nullptr);
         }
 
         bool transform_touch_point(LONG *x, LONG *y) {
-            if (this->get_active() && this->subscreen_mouse_handler) {
-                return this->subscreen_mouse_handler(x, y);
+            if (this->get_active() && this->subscreen_touch_transform) {
+                return this->subscreen_touch_transform(x, y);
             } else {
                 return true;
             }
         }
 
-        void set_subscreen_mouse_handler(const std::function<bool(LONG *, LONG *)> &f) {
-            this->subscreen_mouse_handler = f;
+        void set_subscreen_touch_transform(const std::function<bool(LONG *, LONG *)> &f) {
+            this->subscreen_touch_transform = f;
         }
 
         // renderer
@@ -203,7 +204,7 @@ namespace overlay {
 
         std::vector<std::unique_ptr<Window>> windows;
 
-        std::function<bool(LONG *, LONG *)> subscreen_mouse_handler = nullptr;
+        std::function<bool(LONG *, LONG *)> subscreen_touch_transform = nullptr;
 
         bool active = false;
         bool toggle_down = false;
@@ -216,6 +217,7 @@ namespace overlay {
         // so render() never runs without a matching NewFrame.
         bool has_pending_frame = false;
 
+        bool is_subscreen_overlay_visible();
         void init();
         void add_font(const char* font, ImFontConfig* config, const ImWchar* glyphs);
     };
diff --git a/src/spice2x/overlay/window.cpp b/src/spice2x/overlay/window.cpp
index 64d043d..8b07f61 100644
--- a/src/spice2x/overlay/window.cpp
+++ b/src/spice2x/overlay/window.cpp
@@ -69,6 +69,7 @@ void overlay::Window::build() {
 
     // check if active
     if (!this->active) {
+        this->mouse_hovered = false;
         return;
     }
 
@@ -106,10 +107,18 @@ void overlay::Window::build() {
         // top spot. suppress that so only an explicit focus request (see below)
         // decides what comes to the front.
         const std::string window_id = this->title + "###" + to_string(this);
-        if (ImGui::Begin(
+        const bool build_contents = ImGui::Begin(
                 window_id.c_str(),
                 &this->active,
-                this->flags | ImGuiWindowFlags_NoFocusOnAppearing)) {
+                this->flags | ImGuiWindowFlags_NoFocusOnAppearing);
+
+        // keep the window hovered while its invisible input button is held during a drag
+        this->mouse_hovered =
+            ImGui::IsWindowHovered(
+                ImGuiHoveredFlags_RootAndChildWindows |
+                ImGuiHoveredFlags_AllowWhenBlockedByActiveItem);
+
+        if (build_contents) {
 
             // window attributes - init_pos / init_size are only honored once
             // (ImGuiCond_Once), so compute them a single time instead of every frame
@@ -154,6 +163,9 @@ void overlay::Window::build() {
 
     } else {
 
+        // raw content does not have an ImGui window to hover
+        this->mouse_hovered = false;
+
         // add raw content
         this->build_content();
     }
@@ -201,3 +213,7 @@ bool overlay::Window::get_active() {
     // now it depends on us
     return this->active;
 }
+
+bool overlay::Window::is_mouse_hovered() {
+    return this->mouse_hovered;
+}
diff --git a/src/spice2x/overlay/window.h b/src/spice2x/overlay/window.h
index 7c778ed..732b42b 100644
--- a/src/spice2x/overlay/window.h
+++ b/src/spice2x/overlay/window.h
@@ -24,6 +24,7 @@ namespace overlay {
         void toggle_active();
         void set_active(bool active);
         bool get_active();
+        bool is_mouse_hovered();
 
         // raise this window to the top of the z-order on its next build. only
         // call in response to an explicit user action (keyboard toggle, UI
@@ -37,6 +38,7 @@ namespace overlay {
         // set when the window transitions to visible so build() raises it to the
         // top of the z-order on the next frame
         bool request_focus = false;
+        bool mouse_hovered = false;
         std::vector<Window*> children;
 
         // settings
diff --git a/src/spice2x/overlay/windows/generic_sub.cpp b/src/spice2x/overlay/windows/generic_sub.cpp
index 942776b..1147d8f 100644
--- a/src/spice2x/overlay/windows/generic_sub.cpp
+++ b/src/spice2x/overlay/windows/generic_sub.cpp
@@ -42,7 +42,7 @@ namespace overlay::windows {
         this->texture_width = 0;
         this->texture_height = 0;
 
-        overlay->set_subscreen_mouse_handler([this](LONG *x, LONG *y) -> bool {
+        overlay->set_subscreen_touch_transform([this](LONG *x, LONG *y) -> bool {
             // convert to normalized form (relative window coordinates 0.f-1.f)
             ImVec2 xy;
 
diff --git a/src/spice2x/touch/native/inject_mouse.cpp b/src/spice2x/touch/native/inject_mouse.cpp
index 29f0a79..c775e88 100644
--- a/src/spice2x/touch/native/inject_mouse.cpp
+++ b/src/spice2x/touch/native/inject_mouse.cpp
@@ -41,7 +41,7 @@ namespace nativetouch::inject {
         }
 
         POINT transformed = *position;
-        return transform::screen_to_game(window, &transformed);
+        return transform::mouse_to_game(window, &transformed);
     }
 
     // release the active injected contact and its window capture
@@ -108,7 +108,7 @@ namespace nativetouch::inject {
         }
 
         POINT transformed = position;
-        if (!transform::screen_to_game(window, &transformed)) {
+        if (!transform::mouse_to_game(window, &transformed)) {
             end_mouse_contact(window);
             return;
         }
diff --git a/src/spice2x/touch/native/transform.cpp b/src/spice2x/touch/native/transform.cpp
index 35140df..267ca1d 100644
--- a/src/spice2x/touch/native/transform.cpp
+++ b/src/spice2x/touch/native/transform.cpp
@@ -68,7 +68,7 @@ namespace nativetouch::transform {
     static bool has_active_overlay_transform() {
         return overlay::OVERLAY != nullptr &&
             overlay::OVERLAY->get_active() &&
-            overlay::OVERLAY->can_transform_touch_input();
+            overlay::OVERLAY->has_subscreen_touch_transform();
     }
 
     static bool transform_overlay_touch_position(POINT *position) {
@@ -120,6 +120,25 @@ namespace nativetouch::transform {
         return transform_overlay_touch_position(position);
     }
 
+    bool mouse_to_game(HWND window, POINT *position) {
+
+        // exception: iidx tdj dedicated subscreen window is allowed
+        if (is_tdj_dedicated_subscreen(window)) {
+            return screen_to_game(window, position);
+        }
+
+        // if this game has a subscreen overlay that can transform touch input
+        // but the window is hidden or not under the cursor, reject mouse-as-touch
+        // (e.g., iidx/sdvx are rejected here, but nostalgia is allowed)
+        if (overlay::OVERLAY != nullptr &&
+            overlay::OVERLAY->has_subscreen_touch_transform() &&
+            !overlay::OVERLAY->accepts_subscreen_mouse_input()) {
+            return false;
+        }
+
+        return screen_to_game(window, position);
+    }
+
     // route hardware screen coordinates through dedicated or overlay mapping and report the result
     Result hardware_to_game(POINT *position) {
         const auto dedicated_subscreen = is_tdj_dedicated_subscreen(TDJ_SUBSCREEN_WINDOW);
diff --git a/src/spice2x/touch/native/transform.h b/src/spice2x/touch/native/transform.h
index 6bf5d8d..77a71af 100644
--- a/src/spice2x/touch/native/transform.h
+++ b/src/spice2x/touch/native/transform.h
@@ -12,5 +12,6 @@ namespace nativetouch::transform {
     bool is_tdj_dedicated_subscreen(HWND window);
     bool game_to_screen(HWND window, POINT *position);
     bool screen_to_game(HWND window, POINT *position);
+    bool mouse_to_game(HWND window, POINT *position);
     Result hardware_to_game(POINT *position);
 }
diff --git a/src/spice2x/touch/touch.cpp b/src/spice2x/touch/touch.cpp
index 0ade823..22756cb 100644
--- a/src/spice2x/touch/touch.cpp
+++ b/src/spice2x/touch/touch.cpp
@@ -944,7 +944,7 @@ void touch_get_points(std::vector<TouchPoint> &touch_points, bool overlay) {
     if (!overlay &&
         overlay::OVERLAY &&
         overlay::OVERLAY->get_active() &&
-        !overlay::OVERLAY->can_transform_touch_input() &&
+        !overlay::OVERLAY->has_subscreen_touch_transform() &&
         ImGui::GetIO().WantCaptureMouse) {
 
         return;
@@ -971,7 +971,7 @@ void touch_get_events(std::vector<TouchEvent> &touch_events, bool overlay) {
     if (!overlay &&
         overlay::OVERLAY &&
         overlay::OVERLAY->get_active() &&
-        !overlay::OVERLAY->can_transform_touch_input() &&
+        !overlay::OVERLAY->has_subscreen_touch_transform() &&
         ImGui::GetIO().WantCaptureMouse) {
 
         TOUCH_EVENTS.reset();