Old Man Touchy is a prisoner held in the dungeon beneath the Dreamland Castle. He's a strange, perverted old man who had a habit of touching anyone or anything. He presumably groped or molested the wrong person, which led to King Zøg having him thrown into the dungeon and getting both of his eyes gouged out. However, he appears as a kind and fun person, comforting King Zog in a later scene.
His (currently) only appearance is in To Thine Own Elf Be True, where King Zog uses him to find the truth of the Eternity Pendant. He reveals that the pendant is real, but that Elfo is the one needing examination - remarking that he is "not an elf, but also not not-an-elf" and that he hasn't touched anything like him.