1. The dancepad was not detected at all

With version 0.4.5 the default driver is XInput which does not register my dancepad. I needed to change two lines in the Preferences.ini file in the Save dir to:

InputSetXInput=0
InputSetHIDAPI=1

2. The dance pad behaves like an analog stick, i.e. two opposite directions cannot be pressed at once

There is a guide here https://projectoutfox.com/help/controllers.
Basically I needed to set my direction key mappings in the Keymap.ini file (also in the Save dir) like so:

1_Left=Joy1_Button 1::::Key_left
1_Right=Joy1_Button 4::::Key_right
1_Up=Joy1_Button 3::::Key_up
1_Down=Joy1_Button 2::::Key_down

the button numbers might be different for other pads.

The Project OutFox Discord community is very helpful!