@barbudreadmon @paradadf
Thanks for your help.
Not sure why Flycast/Dreamcast mapping is different than other cores.
I tried with two different joypads and had the same issue.
Anyway, I was able to fix the issue by doing the following:
Modified config via Retroarch in-game menu (Hotkey+A)
Changed controller parameter: "USER 1 Analog to Digital Type" to None (was set to left) for all Users
Device Type was already set to "Controller" for all users
Then do a "Save Core Remap File" which will maintain this configuration for that particular Core even after a Recalbox reboot (seems a better method that trying to use hardcoded cfg files to override the default mapping, as those could be erased by Recalbox after reboot or an upgrade if not properly done)
Now every time you start a Dreamcast (=Flycast core) game, you see in the bottom left: "game remap file loaded" and it works like a charm.
See explanations here: https://github.com/RetroPie/RetroPie-Setup/wiki/RetroArch-Configuration#core-input-remapping
(sorry for the Retpropie link...)
Note remap per core files (*.rmp) are stored in a hidden folder (use ls -a to list those folders starting with ".")
/recalbox/share/system/.config/retroarch/configs/remaps