The update thing might work best… Anyway, considering that you used “Method 2” from the Retropie Wifi Wiki you might also consider to reset the /etc/network/interfaces file to what I have and what works for me w/ Method 1 (i.e. use the dialog wizard from Retropie):

auto lo
iface lo inet loopback

iface eth0 inet manual

allow-hotplug wlan0
iface wlan0 inet manual
    wpa-conf /etc/wpa_supplicant/wpa_supplicant.conf

allow-hotplug wlan1
iface wlan1 inet manual
    wpa-conf /etc/wpa_supplicant/wpa_supplicant.conf

Good luck! :)