It's definitely a firmware issue - although I am surprised that the original XBOX 360 controllers (from launch) do not work at all.
I'll prob use it - but I need to replace the PS4 controller and that's yet another expense I don't need

But this also the least of my worries. While I was testing this out my clone GDEmu just gave up on me - and both my DC's have a broken GDRom drive, so I need to get another GDEmu. It was a pain from the start to be honest, totally unreliable and I had to re-flash it a few times and had a real headache getting it to work. It was one of the first really cheap ones from years ago - and I should have just got a replacement at the time.
One of my Dreamcasts has been used to death, admittedly, but seriously - they're giving me a LOT of trouble these days what with the controller/wingman hassle and now this.