Faulty analog stick

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I have seen a misconfiguration act like that before. Can you post the output from this command?
cat /etc/modprobe.d/mk_arcade_joystick.conf

Maybe you already did this...
In the /home/pi/Freeplay/mk_arcade_joystick_rpi directory, you can run 'make config' and it may help you get it configured properly.

So, it'd go something like this (assuming the system is connected to the internet):

cd /home/pi/Freeplay/mk_arcade_joystick_rpi
git pull
./install.sh

Then, I'd probably reboot. After the reboot,
cd /home/pi/Freeplay/mk_arcade_joystick_rpi
make config

See how that works.