I had the same problem when I first installed my xenium. The 1.0 O/S doesn't support 3rd party controllers. If you don't happen to have a MS branded xbox controller, you can create a disc with the 1.1 OS on it (follow instructions on the xenium page) and put the chip in recovery mode (flip the switch on the chip) and it will load in the 1.1 OS which works with most 3rd party controllers.