I’ve just run into this issue, and I couldn’t find the direct-manipulation-stylus flag in chrome anymore. I think they might have removed it in a recent version.
I’ve been able to fix it though with the following userscript (which you can use with tampermonkey. https://pastebin.com/gMLwx8ZJ
It simply passes any touch events as a mouse event - which fixes the stylus for me, but it also allows you to draw the character with your finger, which may not be ideal.