Sod's Law is on full swing on this one. Just tried it for a 5th time and it's worked.

Sorry to waste anyone's time!

Simply put.
Bluetooth functionality and any PS3 driver are not going to work together.

@BuZz and @dudleydes

Thanks for your help!
Clrmamepro worked like a charm.

Is it suitable for Waveshare LCD screen?
The website seems to be adafruit not Waveshare.

Ok, anyway, is a good idea to change the hotkey and see the results... If i dont get any results, i will try tomorrow with the 3.6 image the same operation.
Thank You!!!

@Dominus I just installed love from the experimental menu of the setup script on my pi 3 on a fresh image and it runs fine (can't say the performance will be that great on the B+ though) mari0 should just install with the script. One caveat is that I'm an idiot and accidentally replaced the love logo with the 3do logo for the carbon theme but I've since fixed that. The original mari0 won't work btw as its outdated and incompatible with love 0.10.0. We use an updated branch for it

https://github.com/radgeRayden/future-mari0

Have you tried lr-mame2003? - which is a libretro emulator so the second controller should work out of the box. Not tested configuring a second controller with the standalone mame4all.

Thanks for the fast feedback Herb,

Good to hear, then it should only be a matter of getting it online to fix almost everything.
I have a ethernet cable connected to the pi but i am not able to get it online. I understand from forums it should be no configuration needed, just plug and play.

From "ifconfig" i get this:
et0 Link encap:ethernet HWaddr b8:27:eb2b:cd:90
inet addr:192:168.1.250 Bcast:192.168.1.255 Mask:255.255.255.0
UP BROADCAST RUNNING MULITCAST MTU:1500 Metric:1
RX Packets:437 errors:0 dropped:0 overruns:0 frame:0
TX Packets:131 errors:0 dropped:0 overruns:0 carrier:0
collisions:0 txqueuelen:1000
RX bytes:100 (100.0 B) TX bytes:100 (100.0 B)

l0 Linkencap:Local Loopback
inet addr:127.0.0.1 Mask: 255.0.0.0
UP LOOPBACK RUNNING MTU:65536 Metric:1
RX Packets:2 errors:0 dropped:0 overruns:0 frame:0
TX Packets:2 errors:0 dropped:0 overruns:0 carrier:0
collisions:0 txqueuelen:1000
RX bytes:100 (100.0 B) TX bytes:100 (100.0 B)

Any suggestions?

I also still hope to get some help to understand what I am doing wrong with the USB. I tried reneabling the USB rom service. I also need some guide here. I found an instruction on how to do it, and used these commands.
cd RetroPie-Setup
sudo ./retropie_setup.sh
However, I then get the same error message I described in the first post.

Regarding sound. I added "hdmi_drive=2" to the config.txt using "sudo nano" command to force HDMI. This did not change anything, however I should add that the pi is connected to the monitor(not a tv with speakers), and I have a head set connected directly to the pi. But I believe that when the internet is connected I should be able to make this work anyway.

Thanks.

Also the Retropie img comes set up so you can play right away with included ports or Roms... Sadly my attempts to have it read a PS1 disk has failed...

Just to confirm I changed my files and gamelist.xml appropriately, so they have "-image" as a suffix on the PNG files, and now they display as intended on loading a ROM.

Thanks for the help!

thanks for the info and pointing me in an alternate direction. will give sselphs a shot!

Thanks wetriner! I was able to fix the updated version of Mupen64Plus.

I deleted my mupen64plus.cfg like you said, and it regenerated the file so that I could fix the hotkeys by following these instructions:
http://blog.petrockblock.com/forums/topic/8bitdo-nes30-pro-hotkey-problems-in-mupen64plus/

I also was able to find the new location of the save files at /home/pi/.local/share/mupen64plus/save/ whereas before it was storing the save files in the roms folder.

Whatever is submitted to the RetroPie-Setup repois updated.

@goatsoup the documentation is useful...

https://github.com/retropie/retropie-setup/wiki/ZX-Spectrum