But the version I'd been seeing of Touch of Evil was not the version Welles had made (which was not an unusual situation in Welles' history, unfortunately). The studio had seen his version and had demanded cuts and changes. Welles was not allowed to participate in this. When he saw the results, he wrote a 58-page memo proposing further changes. It was ignored. The studio's version was released, and it was not a huge success.
Then, forty years later, a project was started to recut and restore the film, as much as possible, following Welles' memo.
The 1998 re-edit involved no restored footage, just a re-ordering of what was there and the removal of some scenes Welles hadn't directed (and at least one scene which he did direct), plus changes in the sound and music, but it alters the whole moral landscape of the film, which is now even more clearly revealed to be a masterpiece.
It is not a "Director's Cut," particularly since some of Welles' original footage was lost (there is one significant scene that Welles did not direct, but the footage it replaced was thrown away, and Welles' memo did not ask for the newer scene to be changed). Welles' memo was not really focused on restoring his original version, but on making the film work with what was possible.
Touch of Evil was a film Welles was hired to direct (as opposed to generating the project himself) and it is pretty much the only one. But he made it his own, substantially changing the story of the book it was based on (Badge of Evil). He was originally hired to act (and his performance is magnificent), but then Charlton Heston (who was starring as a Mexican detective) asked for Welles to direct as well (at least that's the most common version of the story).
It was supposed to be Orson Welles' return to Hollywood after many years in Europe. He thought it would be the first of many movies he would make for Universal. Instead, the movie was taken away from him and he never made another film in Hollywood.
Perhaps the most famous part of the movie is the long tracking shot which opens it (it is specifically mentioned in the long tracking shot which opens The Player), and the studio put the credits and music over it despite Welles' objections (he wanted the credits at the end, as in Citizen Kane). But the whole movie is strong, with Charlton Heston playing a Mexican narcotics detective, Janet Leigh as his American wife and Welles as a corrupt detective in a border town.
I could go on and on, but just go rent it (and be sure to get the 1998 re-edit).
Two more recent movies which show the influence of Touch of Evil are Lone Star (which deals with the question of law in a border town) and LA Confidential (the disagreement between Captain Smith and Ed Exley about how a detective needs to function is a direct parallel to the arguments between Captain Quinlan and Mike Vargas in Touch of Evil).
The reconstruction is fascinating, since I was quite fond of the movie even from the earlier, butchered version. The question, which Welles always said puzzled him, was exactly why the studio freaked out and demanded it be redone. I have an idea about that.
One of the things that's most striking about the reconstruction is that it removes the studio-dictated focus on Mike Vargas (Heston's character) as the straightforward hero of the picture. For one thing, as Walter Murch (who re-edited the movie) points out, what Welles intended was for Vargas' story to be equal to his wife's story when they are apart, as opposed to Vargas being The Hero and Susan being merely The Wife.
But, equally important, the re-edit restores the parallels between Vargas and Welles' character, both cops, both men whose wives were threatened (and, in the case of Quinlan's wife, killed) while their husbands were out chasing criminals, both men who take the law into their own hands (Vargas argues against this, but when his wife is threatened he starts to threaten and beat people up to find out where she is).
The studio, I believe, didn't want to emphasize the parallels between the Hero and the Villain, though this was very consistent with Welles other films, where he frequently had more sympathy for the "villain" (there are elements of this in Arkadin, Othello, Falstaff. and other films).