The only thing LB does is sent a command line to the emulator to run it. It affects nor controls anything within the emulator.
1: All the games you are testing inside of LB, do they run directly in Demul?
2: I see you have the Associated Platform listed as "Atomiswave" is that what you called the platform inside Launchbox? Whatever the platform name is that shows in Launchbox must match what you put in the Associated Platform tab.
Can you choose a game and right click then edit it. Show pics of 1: The Metadata page 2: The Launcher page 3: The emulation page.