I removed cfg file from arcade folder and I'm back on RGUI. Still having some problems as keys set in ES does correspond to those in RetroArch but I guess I have to do some further steps removing "broken" retroarch.cfg files from few places and then reinstall RA from setup script and hope it will fix it.
Thanks a lot for your help!!!!!!!
Please do not post a support request without first reading and following the advice in https://retropie.org.uk/forum/topic/3/read-this-first