"Just in the top part of the screen"? You could try re-seating it but that might be a bad part

If the problem is with the connector, then *maybe* a a gentle brush (emphasis on the gentle!) with a tooth brush and 99% isopropyl alcohol (go to a pharmacy and get the strongest they have) might help things But if the damage is in the LCD itself... once water damage gets inside of it the only thing you can do is replace it *if* you can't live with the lines (I've seen 'wavy' screens) Just make sure you're backing that thing up. Once water has gotten in it, it brittles out the connections in the phone and a seemingly innocuous drop or hit might brick it one day

I've seen cracked screens do this - i.e. the digitizer is randomly shorting. I've never seen the digitizer do this without the glass being cracked, but I'm sure it's possible. Note: the LCD behind it can be fully functional with the glass completely destroyed and/or the digitizer being completely non-functional. They're all glued together but they're separate components that can fail separately. With that said, this could be the beginning stage of the Touch IC disease. If the screen is in great shape (no cracks, etc) then it's going to be an expensive microsoldering fix to address the issue. Replacing the screen would tell you one way or the other. Either it will fix it or it won't - if it doesn't then it's Touch IC.

A picture of the damage would be most helpful but in the meantime maybe if you could describe what was pulled off. Based on the description I'd expect you'll need a new a new screen/LCD, front flex cable, and home button - all three have ribbon cables that connect to the body and I'm assuming they've all ripped. TouchID won't work anymore, but the rest of the functionality should be ok *if* there was no damage to the logic board

From what I've seen boot loops are usually indicative of something (usually physical) failing the initial health check. Has anything changed leading up to this - either a drop (ie physical damage) or it being opened up for a repair?

It would be easier to just take the screen off your friend's 8 and put it on yours. When you do this you need to swap the home button so the Touch ID / home button will at least work the same as it does now. The only reason to swap the logic board out would be cosmetic (ie you like the color of your friend's better than yours or there is damage to yours)

A torn flex can cause a short, besides the component on the end of it not working properly. I've torn a few of them, and it seems to cause different symptoms each time. Out of those times, I've only had the phone function properly with a damaged flex cable once. I'd recommend removing it completely and seeing if that will let you boot back up. I've never tried it with a 7, but with other models the phone will basically function (obviously minus the functionality of the flex components) without the flex cable attached. Do not throw it away! If (when?) you get a replacement cable it will come completely flat, and while it's possible to fold it up based on pictures from the internet - it's a lot easier to fold it when you have a factory-example right next to it. Also, if you want to keep working on iPhones you might want to look at getting a heat gun (or borrow a hair drier) to soften up the adhesive on the front flex cable and the home button before you try and remove it. Heat from the front of the screen /...

Some iTunes errors are related to bad cords, and can be worked around by moving to an Apple branded cord. Also, I have one computer where one of the USB ports is temperamental and changing where it's plugged into the computer helps. Besides that, what's the error number?

If there's no physical damage (Minho is spot on there) one thing to try would be to get an Apple branded cord and block, and let this thing sit on it overnight. I know it sounds odd, but I've seen that 'revive' dead phones that had been fully charged down before and in various states of bizarre behavior because of it

Boot loops usually indicate some sort of physical problem so unless there was something else wrong with the device prior, I'm with Ben in suspecting a defective battery. Why did you replace the battery?