OMG. Ok.... so I FINALLY figured out the problem. As a long-time user of MAME (about 20 years), I've been using mostly older versions that were no-nag and dinput patched. I'd gotten so used to using those versions for so many years (which automatically have dpad configured), that I completely forgot I can simply ADD the dpad controls in the tab menu! D'OH! I'm a stupid.
It's working fine now - yay! Hopefully this will help anyone who might get stuck on the same issue. On another note however, I keep getting an error popup when I launch the version given here that says "Error opening translation file English". Never ever seen this before in MAME. How do I resolve this?