I tested it by switching the up and down, and it still does not work.  Looks like it must be defective.  I think I kind of understand what kowal is trying to say, but I will wait to hear back from Happ before I try to disassemble this joystick.  What do you think the success rate is of trying to bend back the diodes?
I really don't want to waste $50 by not being able to return it.  Hopelly, Happs is good about replacing defective goods.  If they aren't, does anybody know of a different site to buy a 360 from?  I don't want to buy from somewhere that doesn't replace defective goods.