I have exactly the same problem. I found quite a few videos on youtube which shows you how to resolve this by going into the actual retroarch configuration menu's.... but that's in version 3.6 of retropie. In v4.1 (the current latest version) many of those menu's do not appear. I've tried with a SNES styled USB controller... and a USB keyboard. When going through the retropie menu I can use both USB controller and/or keyboard. As soon as i select a game in any of the emulators, then the USB devices no longer work/or are recognised. I cannot even get back to the menu at all. Hard shutdown is the only way to get out of this (unplug the power cable) from my pi. I am also running the same setup as @TheCartesian mentions above running on a pi3 B. HELP retropie guru's..... i stupidly told my kids i'd get this setup for them to play the BEST CLASSIC games ever and i'm failing. Snif snif....