Hello extentofmysin,
Welcome to EAB
Quick post as I'm about to sleep...
Hmmm, I use Xbox controllers connected via USB ports without any issue. You need to make sure that your USB joypad / joystick is connected and the drivers installed (if necessary) so that you can see them through Control Panel --> Game Controllers. Once this is ok then you can start WinUAE.
As you've said above, you now go to the Host --> Game I/O settings and should find your USB joypad / joystick in the drop down list. It should be that easy