Deleted member 1052
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I am working on the same controller just now and it had the same symptoms. I am fairly certain one of your problems is your analog sticks are not wired correctly. You see, the right analog stick also functions as the action buttons on the ps2 home menu.
My Game controller had the exact same symptoms and was fixed by wiring up analog. I think the pots sit at 50% of their resistance so left/down is -50 and right/up is +50 on a 0-100 scale.