Buy a wheel.
Really this is a case of simple computer science.
Digital controls can only be either on or off,0 or 1.
So it's easy to understand that when you turn ,the steering wheel locks fully to a side.
A wheel,on the other hand,has a range of 0-1024(the number may vary depending on bits available) and therefore has a pretty big amount of intermediate positions to work with.
Yes,there are some people that can set WR's on a gamepad but they train hard on that and have their very special configuration.
I was gonna try and make a working handbrake lever using an old game pad button but couldnt do it because of this on or off thing as i wanted it to come on and off gradually depending how far i pulled the lever, but i couldnt.
It doesn't help that much. I have a 360 pad set up to play LFS and it's still twitchy as hell with 90 degree wheel lock and no compensation. Throttle and brake work nicely, but the steering is always going to be far more than you need at high speeds - that tiny amount of movement translates to far more in-game.
Games like GTR2 and rFactor have a control option that scales your steering according to speed so you don't accidentally hit full lock in 0.1s, but LFS doesn't yet.