What version of Powermame32 are you running? Make sure you get 104.1.2 (the latest) from the website.
Some other things to try:
1) Make sure your ledwiz.cfg file is in C:\mame\lighting
2) Are you running a USB hub? Remove the hub, and try to plug LEDwiz's USB right into the PC mobo. I had issues with a hub where the attract modes would work, the events would work, but controls (in-game lighting) would not work.
3) Try all your testing with one game. I used Hypersports (hyperspt.zip) since I knew it lit the P1 and P2 buttons 1,2,3
4) Are you powering the LED's off of the USB power, or do you have a dedicated +5V line running to the LEDwiz. Try hooking up a +5V line to the LEDwiz as shown in the instructions.
5) There are two places to set the lighting options in Powermame32. One is global, and the other is per game. Make SURE you have both of those set right. I dont have it in front of me, but one is in the Powermame32 main screen under something like "default game options".....the same place where you set up the rest of the mame opton. The second place is that you can set lighting options PER GAME. Right-click the game, andsnoop around in th options there. Make sure that lighting is set correctly both globally AND per game.
6) Try trimming down your ledwiz.cfg file to get just two or three buttons working, and test it with games you know use only 1,2,or 3 buttons. Keep it simple, get it working, then add on little by little.
7) Are you sure that you are lighting the correct buttons?? Meaning if your cfg file says
1 48 KEYCODE_LCONTROL
2 48 KEYCODE_LCONTROL
3 48 KEYCODE_LALT
4 48 KEYCODE_LALT
5 48 KEYCODE_SPACE
6 48 KEYCODE_SPACE
are you sure that LCTRL, LALT, and SPACE are actually doing what is expected once you launch a game?? I had a (stupid) problem where I assigned 7,H,9 in my LEDwiz config, then I launched the game, and they did not light..........because mame was mapped to LCTRL, LALT, and SPACE!!! Make sure your buttons DO what you THINK they should be doing.
Give that stuff a whirl, and lemme know what you see.
FJ