Do you have any pics of the joystick? (Especially from underneath.)
If it's a Happ Super joystick, try disassembling it and flipping the actuator over, so that the smaller side is touching the switches.
If it's a Zippy or Sanwa, the restrictor plate is set to 4-way instead of 8-way.
Just keep in mind that if you set it to 8-way, any 4-way games (especially Pacman) will probably not work as well.

DeLuSioNaL29