Hey there Joe!
Thank you SO MUCH for this message! I know you're a busy man, so I sincerely appreciate your time and the great info!
Ok, so here's where I'm at currently:
Checked and cleaned all connections, and re-sat the Q219 card. Still the same issue. Monitor graphics are NOT inverted, and there is just the faintest trace of the crescent cursor when you look closely. Not sure if it's flickering or not. This is what led me to believe it's stuck in HIT/TOUCH. I can confirm the two connections to the Q219 are correct.
Unplugged the lightpen and the USB mouse adapter works perfectly. Although after cleaning there was a slight continuous flicker of the cursor, but it doesn't effect functionality.
My IIx lives in a studio on the east coast, and I will get to see it again at the end of September. I do have a spare lightpen, so I'm going to see if switching it out solves the issue. The current lightpen was original to the machine, was used extensively, and was already repaired once. Hoping it's just a bad solder point... Then I'll just need to find someone to take a look at it (I don't wanna try myself, not brave enough LOL).
Thank you again Joe! I'll report back at the end of the month with my findings.
Best - Frank