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Is it trying to use XInput? PSO is old and only supports DirectInput controllers, so newer controllers and/or their drivers may have no effect in PSO unless you can force them to use DirectInput.
I've actually made a very very very good config for the steam controller. I'll be uploaded it to the community in a bit. For the joystick, I'm using the mouse region. Allows for more accurate on the fly movement so your character doesn't have to turn and face. Better then the xinputs. I've created a dual stage touch menu on the right pad so you can use the shortcuts- 1 to 8 on the fly. You need to enable mouse/ drag and keyboard controls. This works better than when I had my other controllers working before.. far better. Almost like using mouse and kb.