Since XP automatically updates itself, assuming you don't have some weird installation then I can only think of two other things. There is a Windows Service Pack that you can try. I am not sure if there were any issues with Game Controllers.

The other common element is the game port. Having your brother try it is a good idea. It's possible that the game port has some issues. So even if the simple joystick works maybe this much more complex one is having difficulty with the game port.

Another possibility might be other software that conflicts with the game port. You might try to close down everything that you don't need to keep XP up and see what happens.

Sorry I can't be of more help but I know how frustrating a problem like this can be.

Best of luck,

Tom