Well I answered my own damn question with the easiest of solutions!! LOL
I'll leave this dumb post up for anyone else yanking their hair out in the same situation.
I had all 3 controllers plugged into my Pi. NES, SNES & Genesis....Unplug all but Genesis. That's it. Genesis controller seems to need to be alone on port #0. Once I did that, in-game it worked smooth as anything.
Now to figure out why my Sonic rom has a little dude in a robot ship instead of Sonic on the screen! WTF lolol