Open /opt/retropie/configs/all/retroarch.cfg and remove
input_player1_analog_dpad_mode = 1
input_player2_analog_dpad_mode = 1
input_player3_analog_dpad_mode = 1
input_player4_analog_dpad_mode = 1
input_player5_analog_dpad_mode = 1
input_player6_analog_dpad_mode = 1
input_player7_analog_dpad_mode = 1
input_player8_analog_dpad_mode = 1
