I go to options > default game options > controllers and enable light gun input is greyed out.
How do i enable this? i take it something on other tabs needs to be active for this option to be active?
Based on this statement, I'm guessing you're using Mame32, but that shouldn't matter for assigning specific inputs to games.
To get the buttons working on your AimTrak, the only foolproof way to do this is to launch the game you want to play, pause it (hit 'p' on the keyboard), and then hit tab to enter Mame's in-game configuration menu. From there, select 'Input (this game)'. Once the next screen comes up, you need to locate the game's specific input that you want to re-map to your aim track's trigger. Arrow down to that input, select it (usually by hitting 'enter' on the keyboard) and then click the fire trigger. Be sure to keep the gun pretty still when you do this, because if you're moving it around, Mame will interpret the movement as your intended assignment, not the trigger. If you mess up, just clear that game's control by selecting it, hit 'enter' then 'escape' right away. That will clear all the assigned inputs for that control. Then you can try again.
This is one surefire way to be positive you're assigning the gun's input to the game in question. You'll need to complete this process for each game you want to use the AimTrak for. You will only need to do this once.
One note: be sure to use the same USB port each time you plug/unplug the AimTrak in. Also, be aware of any additions or removals of mouse type peripherals on your system. This may change your device ID, causing Mame not to see your AimTrak. On my rig, I have a regular mouse, trackball, and my Aim Trak. One time I unplugged the mouse during some servicing I was doing and forgot to plug it back in. This caused my AimTrak to get a different mouse ID on startup, which made Mame stop seeing it as 'Gun 2' like it did before. Once I unplugged the AimTrak, plugged back in my mouse, and then my AimTrak again, all was fine.