Vintage gaming community.
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Here's a form post that goes into it.
Make sure you have analog button enabled on your controller. Go to options. You have to press "Select" (if I recall correctly) in the controller config screen (it should tell you at the top of the screen). Then you select "Steering" and press left/right on the d-pad to select analog/digital steering.
Disclaimer: I haven't had to do this in years, but that sounds familiar.
Thanks! And for CMR 2 it turns out it was working fine, the PS2 analog stick is just a bit more primitive to what we're used to now. But much better than digital in any case!
Open the game and hit the playstation button (or home, whatever you want to call it) there should be an option for the controller type that the emulator sees.
Thanks, that's it for the PS3!