First off,
Glad you could join us. Exit is in the upper right hand corner of your screen (just kidding, there is no exit). Stay out of Political Discussion and General Discussion (there lies madness), and keep using Knossos (seriously, it's the best thing).
I can only speak to the first issue, as I don't play with a controller (frankly I'm surprised the game is even playable that way).
You play using an SCP build on Knossos by selecting an FSO build within the settings of whatever mod you want to play. So, for example, if you want to play with all the visual enhancements of the MediaVPs, you go to the Details menu of the MediaVPs "mod," go to the "FSO settings" in the "Options" dropdown menu, and select the executable for the build you want. FSO doesn't "bake" into retail--it's a separate executable, not a patch for the retail executable.
The Retail FS2 "mod" behaves the same way, and could run on any executable, including FSO builds (although there's not much point without another mod of some kind unless you're just testing code, but you can do it).