Thank god for this thread, same thing just happened to me. I just bought a new controller (8Bitdo Ultimate Bluetooth) and experienced the exact same behaviour as OP described.
This first happened in bigbox where I went to launch a game, and it cycled through my other systems and attempted to launch/quit a few other games before I panicked and unplugged all devices. Then on testing in launchbox, the above behaviour (Only starts when launching a game).
I'm curious as to whats going on here and if there's a solution to it?
EDIT: Just tested again in launchbox, exact behaviour, except I tabbed out before any damage could be done and if I tab back into launchbox, I can see my cursor going for the bottom left corner. I'm on Windows 11, launchbox 13.5