It took me a couple of times to figure out what you meant in your post.
I don't think that it can take the output of a J-Pac (which outputs PC keyboard signals), though you might be able to hook it up directly to the controls themselves (bypassing the J-Pac). I don't know what the X-Arcade is like internally, so I can't say for sure.
If you're willing to settle for just one player working off the J-Pac, I do know a solution. A Device called Smart Joy 2 lets you use a PC keyboard as a joystick (which is what the J-Pac outputs) on your Dreamcast. I tested it and it does work, but you'll need to reprogram the J-Pac to what the adapter wants. (the key map is inside the package it comes in)
link to it:
http://www.baysoftgames.com/dreamtoplaya.html(it also lets you use a playstation controller on Dreamcast)