Still no luck.

Ill go through the way I have it set up and hopefully you can tell me where Im going wrong.
Everything is on an external hard drive (M:\) at the moment which Im going to put in my cab when its ready.
So mame is in m:\mame32
The controls.ini file is in the main mame directory m:\mame32\controls.ini
I have mala also on the root of the drive M:\MaLa v1.0 RC7
The VCP03 layout is in - M:\MaLa v1.0 RC7\mala layouts\VCP03
With the console folders and buttons/players/controls folders where they were within the mame folder. As follows.
M:\MaLa v1.0 RC7\mala layouts\VCP03
M:\MaLa v1.0 RC7\mala layouts\VCP03\Mame
M:\MaLa v1.0 RC7\mala layouts\VCP03\ePSXe
M:\MaLa v1.0 RC7\mala layouts\VCP03\ZSNES
M:\MaLa v1.0 RC7\mala layouts\VCP03\Megadrive (which I added myself its jut a copy of the mame.mll and folder that Ive named Megadrive, I plan to photoshop a megadrive sixbutton controller into it similar to the ZSNES and ePSXe ones. Ill be happy to share that when I get around to it) could this be causing problems? It doesnt seem to work when this is removed so I dont think its this.
M:\MaLa v1.0 RC7\mala layouts\VCP03\Mame\Players
M:\MaLa v1.0 RC7\mala layouts\VCP03\Mame\Controls
M:\MaLa v1.0 RC7\mala layouts\VCP03\Mame\Buttons
Within Mala I have the settings exactly as you have them written in the post above. Trying both pointing Mala to the respective definable folders manually and having it search the layout path automatically. Still no luck.

Is it possibly something to do with the way mame is set up? Im not 100% sure that mame is recognising the controls.ini file. Is it supposed to?
Could it be that I'm using Mame32?
Please help. Mala is absolutely my favourite FE and with this layout working properly it should be awesome, eliminating the need for me to stuff around with the control viewer programs like CPV2 and its ilk which while they look very cool are an extra hassle that if I can avoid I will.