would it be possible to make it compatible with a Xbox or play-station controller so i can use the joysticks to move and look around instead of dpad and rt and lt

Use steam to map the controller onto the game if you add it as non-steam game. Would work. Tho Imo you kill the vibe of the ps1 by doing this x)

XBOX controllers are fully supported since it's Xinput, PS controllers are not so you need DS4, or run the game via Steam (Steam Input), or use X360CE, or use AntiMicro/JoyToKey, so much options.