I have created a new retropie image and followed the autmatic installation. (It creates a picade overlay file and the lines are put in /boot/config.txt - but still fails to load…)
To fix the problem, update your gamepad drivers and check if that helps. Gamepad not in Device Manager – If the gamepad isn’t in Device Manager, it’s probably not recognized by your system. To fix the issue, you need to find any Unknown devices in Device Manager and update their drivers.