Thanks for the file, sadly it didn't work. The problem persists. I adjusted steam's controller support here's the result:
Do you have Playstation controller support enabled in Steam?
Yes, I have tried with steam controller support enabled. When I do so, the game detects two controllers (one virtual controller created by steam and the other the actual controller). I can see it when opening the game, it sees a new "generic" Microsoft controller. Screenshot:
https://imgur.com/4H7tsuQThe effect is the game getting confused because every button press I do is duplicated. For example if in game I press start I get the game menu and overlayed I get the profile selection window as if a new controller was connected for a new local player.
This is "tolerable" in single player, but I'm trying to play shared screen coop locally. When the game is running and I connect a second physical controller the radial menus respond weirdly. Only the first player can open them and they don't close. The radial menus stay open until the opposite trigger is pressed (So L2 closes R2 menu and R2 closes L2 menu).
Here's the game config menu when two controllers are connected:
https://imgur.com/hBOzSqK