Please tell me you have found a solution as I have the same issue (new to retropie – just started playing with it yesterday). Have a defender gamepad (http://eng.defender-global.com/products/game/gamepad/game-racer-turbo-rs3/). When I boot up – retropie detects my gamepad. Then when I hold any button to configure I can configure all buttons but instead of going to OK (checked it with keyboard 0 works fine) setup goes to UP button and not allowing me to do anything. Tries with latest 2.6 and 3.0b2.