I have found that there is not much you need to do with recalbox to make pandora box arcade controller work. If you have a fresh image that you write to the SD card and then boot raspberry pi, you will then configure your player 1 controller from the controller settings > configure a controller. Then after you have finished and saved that, go back into controller settings > configure a controller, and this time hold one of the buttons on the player 2 side so it detects it and takes you to the controller configuration screen. Then configure all the buttons you want with that player 2 controller and save.
One issue I ran into with configuring the pandora controller was that my player 2 "select" button was not recognized when I try to configure it. So instead I assigned player 2 select to the button in the back of the controller that allows you to get to the exit menu typically when running the pandora box software.
After both players were configured, everything just worked.