You asked for the reason why the joystick starts acting like a mouse. This is due to an ancient version of the hid.class you have installed on your machine, that will generate default actions on joypad axis for mouse movement, which cause the mouse to be centered as soon as you plug in the pad.
Deleting the hid.class will solve the problem of the malfunctioning, but you will not be able to HID devices except for keyboards and mice any longer.
The correct solution would be to upgrade your poseidon version to the last V2.x version (in the ISO of V1.4.5) or the new V3.2, but *DISCLAIMER* beware some users have problems with this version.
Bye...
Chris Hodges