Got another issue I ran into but was able to fix and just want to share my solution.
I had an issue on the Polycade Lux where the player 1 controls were not working at all (in AGS or in games). I followed instruction to unplug the controller from it's USB port and plug it back in. I did so and then both controllers worked in AGS but not in game.
I then followed instructions to uninstall AGS, delete specified folders left behind (except for games), then reinstall AGS. After doing so the controls were working in AGS and in game (although the mapping in Retroarch seemed off so I remapped them manually) except for the Exit button. It did nothing. While troubleshooting I restarted AGS and the entire computer a couple of times. I don't know which fixed it, but it was fixed after those restarts/reboots.
I hope this helps anyone in a similar situation.