Microsoft confirmed the behavior of this service was changed, and it's now considered a "critical service". It cannot be disabled using any support method. But they were unable to provide any information as to why, patch notes, or when the change was made. It's all very strange. We can only assume it was a Cumulative Update at some point, as some of our virtual machines we deployed earlier in the year had this service disabled using Services.msc (disabled, rebooted, service stayed disabled).
We did find a workaround, but it's clunky and I don't expect anti-malware systems to like it. Also, it will likely be reverted after Windows Updates are applied.
- Launch regedit and navigate to HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\TabletInputService.
- Set the Start DWORD value to “4”.
- Right-click the TabletInputService key, select Permissions… and then click Advanced.
- Change the Owner to the local Administrators group, check “Replace owner on sub containers and objects” and click Apply and OK, OK.
- Right-click the TabletInputService key again, select Permissions… and then click Advanced.
- Click Disable inheritance and then select “Convert inherited permissions into explicit permissions on this object”.
- Change all permissions to Read Only and then click Apply, OK, OK.
- Restart the server and confirm the “Touch Keyboard and Handwriting Panel Service” (TabletInputService) is disabled and not running.
Another workaround, if you're using Parallels RAS for your RDS environment, you can use server optimization to disable this service.