I am also having this issue (and joined here specifically to ask about it). Is there any way at all (AFTER the new update) to play co-op with Player 1 on Keyboard/Mouse and Player 2 on a gamepad? (I'd even take both players on 2 keyboards if that's what it takes. ) I can get nothing working - it's hugely disappointing. I was really looking forward to playing co-op with my father.
I tried both proposed solutions to no avail; I unplugged the controller, loaded a game, plugged the controller in, but the game didn't see the controller; I unchecked 'Gamepad Support', loaded a game, and then hit start on my controller, but nothing happens. The game plays fine with a controller in single-player.
Any help at all would be appreciated.
(I am using a PS3 DualShock with MotioninJoy to emulate a 360 controller)