OK, thank you for these tests.
Now I understand what is happening. You and Jimmy both have a Simucube as the first controller in the list.
And there is something we might call a 'bug' in the Simucube drivers.
The device type is reported as DI8DEVTYPE_1STPERSON
- LFS displays 'First person controller'.
I would expect them to report DI8DEVTYPE_DRIVING
- LFS would display 'Steering wheel'.
Maybe they have a good reason for that, but it's confusing the LFS code.
In this case, LFS assumes that the first person controller is something like a gamepad so it sets up as if it is a gamepad, and that is why the Look Heading and Pitch are assigned.
I'm not quite sure what would be a good solution. I have an XBox controller here and it also reports as DI8DEVTYPE_1STPERSON so that's why LFS sets up that controller type like a gamepad. It's nice to automatically assign the right joystick to view control.
Anyway, at least we know the reason now. Thanks!