Ok...slightly confusing as to why Player X is coming up twice?
It's one device, but it advertises itself both as a gamepad and keyboard. The 2nd keyboard device (gpio_keys) is the GPIO connected HAT.
I tried to find the file you said (i.e. \retropie\configs\all\retroarch\autoconfig) but I couldn't find it either in the Pi home directory or from root. So I'm not sure what I am doing there...sorry.
My modifications were intended for the retroarch.cfg file that you posted previously - from \\retropie\configs\all\retroarch.cfg. Hopefully, switching the keyboard controls from P1 to P2 would enable you to use the USB controller as P1 and the Hat as P2.
So, I tried running it and when I did it allows me to select which 'user' for whichever player....but when I do that the only option is 'Player X'...there's no original Picade HAT option for P1 (i.e. the Keyboard I set up).
That's because the Hat is not detected as a gamepad and the script only works with gamepads, not with keyboards.