Post the Kodi log file from $HOME/.kodi/temp/kodi.log to pastebin.com, maybe we can spot the error.
Also, please fill in the info asked in https://retropie.org.uk/forum/topic/3/read-this-first.

Just to close the issue: I've set gpu_mem at 320 Mb via raspi-config and now everything works fine! Thank you very much!

@paulmorabi That's it.

Thank you @Rascas for pointg out where to ask.

For the record: the model of the joystick is Terios T3, but I have found that it is also branded as Gen Game S3.
I haven't found official docs of it, but digging in the forums I found how to set it in gamepad mode, working perfectly without the need of the extra adapter sold to work with a PC (basically turn it on holding HOME and A buttons).

Here is how I did it in OSMC (it is related to retropie because i have used retrosmc scripts, based on retropie, as a part of the solution):

Install OSMC and SSH into it. Then...

UDPAGRE OSMC TO KODI LEIA

sudo nano /etc/apt/sources.list
(add the following line in the very first line of the file)
deb http://download.osmc.tv/dev/gmc-18 gmc-18 main
(to save the file, press CTRL+O, ENTER, CTRL+X)
wget -qO - http://download.osmc.tv/dev/gmc-18/pubkey.asc | sudo apt-key add -
sudo apt-get update
sudo apt-get dist-upgrade
dpkg -l | grep mediacenter-osmc | awk '{ print $3 }'
(the last command should show OSMC version 17, which has KODI version 18)

INSTALL RETROSMC AND PS3 DRIVERS

cd /home/osmc
wget https://raw.githubusercontent.com/mcobit/retrosmc/master/install-retrosmc.sh .
chmod +x install-retrosmc.sh
./install-retrosmc.sh

Go to "manage packages" > drivers > ps3controller > install from source (wait) > configuration/options > install ps3 controller (clone support gasia) > pair ps3 controller (clone support gasia) (follow instructions) > Then "connect controller through usb", then disconnect usb, and pair via bluetooth… It may not pair yet.

UNBLOCK BLUETOOTH

apt-get install rfkill
rfkill unblock all
hciconfig hci0 up

MAKE JOYSTICK RECONNECT AUTOMATICALLY IN THE FUTURE

sudo su
echo 'SUBSYSTEM=="input",ACTION=="remove",RUN+="/bin/systemctl restart sixad"' >> /etc/udev/rules.d/999-sixad.rules
sudo udevadm control --reload-rules && udevadm trigger
sed -i 's/exit 0//bin/systemctl restart sixad\nexit 0/g' /etc/rc.local

INSTALL EMULATOR ADDONS

From the Kodi 18 (Leia) main menu, click on the Add-ons icon (open box icon). Select Install From Repository, Click on the Kodi Add-on, Repository, Click on Game Add-ons, Select Emulators, From the giant list of emulators you now see, you have to install the ones you wish to use. If you can't find the "Emulators" section, some distros don't compile them. The script install-retrosmc.sh (above) may have some hidden menus to download and install all cores (emulators) in one shot. Give it a try. Also, check under kodi settings "my addons" to see if you don't already have all the emulators installed.

Now, install some other game addon (research about your options!) which uses "Kodi retroplayer" to launch games. It will require some emulators addons (also called libreto cores) to have been downloaded and installed already on kodi.

@pelztier Open a separate topic and provide the information from https://retropie.org.uk/forum/topic/3/read-this-first.

@thom_retropie There is no Kodi 18.4 on Raspbian Stretch, only on Buster, but I can confirm that Netflix works fine in Kodi 18.2 on RetroPie, just follow the instructions. Don't forget to install pycryptodomex.

I was interested on Milhouse build because it's best way to play 10-bit x265 videos on raspberry pi 3.
I installed it on a new sd card but they don't smooth enough, so i think I'll give up on trying playing 10-bit x265 videos

Raspbian Stretch is not a requirement for Kodi 18.
Kodi 18 will be available on Raspbian Stretch when the final/stable version of Kodi 18 is available.
We might provide some tests builds of Kodi 18 when it gets closer to the final version, like beta or rc versions.