read readme file !!!!!
make a new directory called "gamepad" in your daytona folder
put D3LauncherCL.exe, sharpdx.xinput.dll, sharpdx.dll ONLY in that folder. Do not move .ini file. Try and launch from there. It should work with x1 gamepad. I had the same issue with x1 gamepad.
But my start button always worked, so I don't know. This is only if your gear shift doesn't work.