First, when configuring the joystick through emulationstation which set of configuration options should I use to configure the joystick? The first set of directional inputs, or those farther down in the configuration menu?
You can use both to navigate EmulationStation, but most games expect something similar to a D-Pad (the first), so I'd use that.
I am currently using the first set of directional inputs but the joystick is very sensitive. If using the other directional inputs don't make a difference is there a way to adjust the sensitivity of the joystick?
You can try to increase the deadzone for the joystick using evdev-joystick , a command line utility.