you don't need the ipac. just get a KVM switch that has USB, you are going to need a way to switch out the video anyway. The pads work fine in mame.
THe way you have it set up won't work since you will probably have ground issues, its best to seperate out the grounds, you can do this with a switch, or find the appropriate resistor and wire it up to the SMD power on the xbox pads, but that is PITA and more complicated.
Just use the pads.