The issue started occurring just few weeks before the end of warranty. My laptop stopped detecting the the internal screen in Windows. When booted to Windows with no other screen connected, the internal screen is blank. If the external screen is connected during booting, internal screen is enabled but with settings like resolution taken from the external screen causing everything to be shifted to left and the external screen is blank. In fact it seems that Windows thinks the external screen is internal as touches on internal screen are still working. BIOS, Windows recovery, Windows booting are correctly displayed on the internal screen - the problem is with Windows logon screen and further. Also when connected to the external screen, Windows doesn't show internal screen in the dropdown in the Screen Resolution menu. When using Ubuntu, the OS correctly recognises and works with internal or both screens. I tried reinstalling vanilla windows, next used Dell Recovery to reset to the initial state and nothing helped - this is why I think this isn't Windows issue but hardware issue that affects Windows. I followed some advices from the Dell support portal and tried to install the firmware update (XK8DT) but got "AuxUpdate MFC Application has stopped working" error and couldn't proceed. Installed all drivers including the BIOS update from the Dell website - nothing helped. Run the diagnostics from F12 menu - they all passed reporting no problems. Restored BIOS defaults - no difference. Run Online Helpdesk tests, no problems detected.
The biggest problem is that I thought the problem is with Windows initially and waited to reinstall it due to being busy at work and not having time to back up all my files and was very disappointed to realise it is not a software issue 3 weeks after my warranty ended.
Here are two videos I recorded to demonstrate the problem:
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