Also when I run the i-pac test program it says that the p1 joystick is pressed or shorted, does this indicate a problem.
It is if you aren't pressing it. It sounds like you are having wiring problems.
1) Make sure the ground is only connected to the COM tab (Common) on each microswitch.
2) Make sure the wires from the inputs on the I-PAC are only going to the NO tab (Normally Open) on each microswitch. (Sounds like you have 1 or more going to a NC tab (Normally Closed)).
3) Make sure you have no wires or quick disconnects touching each other.
4) If the first 3 are done, you may have a bad microswitch. Try swapping it out with a different one to verify.