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Don't need to enter Big Picture Mode, just go to the Properties page and do it from there.
If it respected the global setting we wouldn't need to force it off, yet here we are.
It’s affecting Direct Input and XInput drivers. It affected Rogue Squadron 3D and GTAIV, and other apps. Once it was set to “Force Off” it was fixed. The problem is that when that setting is set to “Default (Global)” it should be off by default. In short, Valve accidentally screwed up the Boolean code for “Default (Global)”.
You don’t need that feature on unless you’re using Steam Link, or you want to play Goldsource and Source Engine games, or other apps with little to no controller support... with full controller mapping capabilities. All it is, is a KB/M to XInput/DirectInput wrapper.
https://i.imgur.com/3US71LC.jpg
Why? RetroArch has very good controller support by default.
I've had no issues (not even at the beginning) using my controllers while sitting in front of the machine.
However, any time I try to use Remote Play, the buttons are wrong. I have the JP style layout in RetroArch (right face button is confirm, bottom button is cancel). However, While using Remote Play, the bottom button is confirm, and no button is cancel (I was able to use L2 to back out).
I have played with various settings in Steam, trying to turn the Steam Overlay off and on, setting the input to Global and Forced Off (even Forced On), but no combination solves my issue.i
Again, it's very weird that the controller works as intended while I'm at the computer directly, but only gives me issue when I'm streaming to another device.
Edit: To further explain this, while Steam input is enabled, start up RetroArch like normal. Then go to your Steam overlay with Tab+Shift and go to Controller Configuration and look for a custom profile that's just Gamepad. Pick that and it should no longer conflict with your input on your keyboard.
Second Edit: You can still use Hot Keys too! Okay, I think I'm done. I hope this helps others like me.