The fact that touch will create a directory instead of a file make me suspect that something is wrong with the root filesystem.
Step 1 is to make sure your file system is ok.
First check on which partition your rootdir is mounted
root@orion:/# mount | grep on\ /\ type
/dev/sdb7 on / type ext3 (rw,relatime,errors=remount-ro)
Reboot your system from a liveCD en do a fsck of de root partition.
If everything checks out okay, reboot your system in single user mode. Mostly indicated as recovery in the grub menu's.
Log in as root
Now check your root uid/gid with
uid=0(root) gid=0(root) groups=0(root)
This will tell you what the defaults for your uid/gid are and which groups you are a member of.
After that we can take it further.