Let's start by taking games out of the picture.
1. Launch the
WinIPAC application.
2. In panel view, any pressed control icon should light up.
When you press the joystick in a particular direction and hold it, does the associated icon on panel view stay constantly lit or does it shut off like you described?
What about P1 Button 5? (z) If you open a notepad/wordpad window and hold down the button, does it do an unending string of z's or does it do the same thing that you described for the directions?
Scott