Yesterday I picked up one of the old PS2 Street Fighter 15th Anniversary controllers for $2. I plugged her in for converter testing and immediately realized that the dpad was as bad as I remembered from owning one for Xbox. Diagonals do not register consistently, if at all. You would have thought they could have given this thing 5 minutes of play time on the game this was intended for.
Anyhow, I cracked this bad boy open and started playing around with it. I tried swapping the rubber dpad contact pad from a Sony pad and a Saturn pad. Both changed the feel of the dpad completely, but did not address the issue. Diagonals still sucked. I then thought back to my old friend, the PSP/Xbox 360 dpad fix which worked beautifully.
Find a piece of clear plastic to use as a cutout. I used some clam shell packaging that was laying on the floor from a dremel attachment. The idea here is that it needs to be pretty thin. Use a sharpie and roughly trace the inside of the dpad. Cut it out and stab a hole through the middle using a small phillips screwdriver.
Make sure that it fits cleanly into the surroundings. I had to re-trim mine a few times for a good fit.
Now reassemble the controller and you’re ready to roll. Diagonals should come out easily.