I know it might be late on this, I play using the 8BitDo SN30 controller. Try to see if your controller has an Input mode.
If there are different modes, on the back of the controller is a sticker with instructions on how to change the modes. Usually by pressing Start + X or Y or A etc.
I believe XInput makes the controller connect as if its an XBOX 360 controller. Experiment with the different modes until you find the one that works with PSO!