Bit late <_< for most of the previous posters probably, but perhaps this will help someone else.
I'm playing with a Xbox controller S (from the original Xbox), and the game refuses to recognize the right analog stick for me as well. I've tried every number from 0-9 for the axes, but still nothing. This is so far the only game I've had this problem with, so it's not the controller or the driver that causes the problem.
Any help solving this would be appreciated 
I'm using the same controller (XboX S) with XBCD drivers (Ver 1.03 I think). I am able to aim with the right stick with s2ax="3" s2ay="2" in the usersettings file (Joy axes line). I also have the right stick Y axis set to +Z and -Z (Down and Up), and X axis set to RZ+ and RZ- (Right and Left) in XBCD setup though.
http://www.genericgamer.com/Aquaria/XBCD.jpg I am also able to aim with the right stick even with auto-aim on (although there is problem with auto-aim when not moving).
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Finally, I'm a bit of an odd ball, but using a gamepad and mouse (analog movement with mouse aim on the cursor) doesn't exactly work. Try it. You'll see what's wrong. ...
I am also an oddball and would love to try mouse and analog stick movement in combination. I tried (and liked) playing with WASD and mouse, but I'm a finger klutz when the pressure is on. But yeah, the problem is the game centers the cursor on Naija as soon as it detects any joy input. One could (and I may) map the stick to WASD with JoyToKey or AutoHotKey and turn off the joypad sensing with aqconfig. Then you're back to digital input though, analog is so much smoother.
I have tried JoyToKey for mapping songs to D-pad, seems to work fine. I also experimented with turbo-fire. (My fingers tire easily.) <_<
Is there a button for looking, like the middle mouse button? Its a feature I miss when I use the controller.
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You can use AutoHotkey to map the Mmouse button to a joypad button. You don't get full effect though. If you are swimming and hit it, the camera moves in the direction of movement about half of what it does using the mouse. If you are sitting still and hit it, then the right stick (if it is set up to aim) will move the camera about half of what the mouse would. Better than nothing, but for long distance sniping the mouse rules.
Something I miss when using the controller is way Naija slows to a stop with the the mouse. It's much more natural looking underwater than the abrupt stop with joypad or keyboard. Gameplay design decision?
EDIT: One more thing. Using the AutoHotkey script above in conjunction with JoyToKey to map the mouse movement to one stick and the mouse wheel to the other, you can zoom and move the map around with the joypad.