I've taken a look at this and it seems the issue is the Bluez updates due to CVE-2023-45866 (as I said initially).
This will likely affect any (old) gamepad which doesn't encrypt the comunication with the host. The workaround is suggested in the linked Ubuntu bug report:

Set ClassicBondedOnly=false in /etc/bluetooth/input.conf
Run sudo systemctl restart bluetooth or reboot

Possibly other gamepads affected - the Wii U Pro Controller (haven't tested it yet).

NB: this issue is not restricted to Raspberry Pi, it affects any platform where Bluez was patched for CVE-2023-45866.

The ps3controller and sixaxis are the ones you need to install, but not at the same time. Remove both and try with the sixaxis driver only - both for the PS3 and the clone (for which you might have to enable 3rd party clone support in the driver).
I don't think the dongle will help, the Bluetooth connection should be ok on the 3B+ model.
How did you install your RetroPie system ?

@Efriim said in PS3 Controller RP3+ issue:

sudo rpi-update

ok so I didnt have time to mess with this for a couple days but I started this morning by simply typing in sudo rpi-update and rebooting. bluetooth worked perfectly again on PS3 controller. Thanks for your help. If anyone else has this issue I would do this first and pardon the ignorance if this was obvious.

@MosaicDragon The ps3driver - if installed - will disable the native OS Bluetooth stack, so you'll not be able to pair additional (non-PS3) controllers. This is the behavior you're seeing. I advise you to remove the ps3driver and install the sibling customhidsonly driver and try to pair any Bluetooth controllers you have (including the PS3 controller).

@swapfilez Third party pirated images do not receive support on this forum. Go ask VLC.

@pawpie when you set the overscan thing right there is 4 lines for setting the overscan for all 4 sides of the screen. You need to slowly increase/decrease the numbers until you get it perfect on your screen.

For the ps3 controller you need to go into retropie setup and go into the drivers section and setup the ps3 controller in there.