As of the latest version of Chrome on Windows 7 (Version 22.0.1229.94 m on 12/10/12) if you are using something like Multitouch Vista (or hardware that has a Multi-Touch device like my Tablet PC) you should not enable "Emulate Touch Events". This is because MTVista should be providing actual Win32 Touch messages to Chrome and Chrome will then generate Touch events from these. Furthermore under about:flags there is an option to "Enable touch events" which appears to be irrelevant as they work with or without this option.
To see if it is working in Chrome use a demo like Multitouch Canvas Fingerpaint Demo that will only draw in the box based on touch events that I found on a Tutorial on "MULTI-TOUCH WEB DEVELOPMENT"
I think you are getting slightly confused as to what MTVista does or just may have set it up not quite right.
First to make sure the drivers are working fine:
Try to draw with mspaint (just good old Paint included with Windows) with several mice and if you get multiple lines it is installed correctly.
A quick search on setting up MT Vista on the Codeplex page leads to this link "STEP BY STEP TUTORIAL : INSTALLING MULTI-TOUCH SIMULATOR FOR SILVERLIGHT PHONE 7" which ignoring anything specifically relating to Silverlight is what I do every time I have set up MTVista in the past, of which have been many at my work.