I can’t speak for xbox controller idk how they are these days, but i bought a cheap ps4 controller of aliexpress and it works great.
Controllers can be a bit wonky though, sometimes it’s best to use the steam controller thingy in ur screenshot, sometimes it’s best to disable it…
When checking if your controller is working this site is handy.
I sometimes had a situation where the controller wasn’t working on steam, using this allowed me to figure out if the issue was steam or the kernel/drivers (e.g. if it works in there it’s steam, if not it’s drivers/connection issues)
Some games will map the buttons wrong sometimes, at those times switching between using and not using the steam controller thing occasionally helps but usually it’s a game-level issue (something the game devs would have to fix, not steam, you or the drivers; in those cases there are sometmies mods that fix it)