I would suggest either using a much higher baud rate, say 100K or direct wired connection for initial testing.
You didn't mention what LP version you are using.
Can you at least get the joystick recognized in GCS? Set it up and calibrate it in GCS under Tools -> Options -> Controller. I got this working fine with a standard analog joystick on a port that was part of a sound card. Have you seen this GCS page?