If you've ever messed with Steam's controller settings, it may be preventing controllers from working on games added to Steam.Guests' controllers will still work correctly regardless of what controller they use If you don't have a specific reason to use it, keep it as Xbox 360 and restart Parsec from the tray bar. If the host is using the Computers tab and has Settings > Host > Virtual Gamepad Type set to Dualshock 4, that may not work well with the game you're trying.This means if the game is being hosted on Arcade, you might only be able to play it using the Computers tab in that case Some games don't detect controllers that got plugged in after the game was opened.
If you're confused about how to configure your game/emulator or whether the game has multiplayer, look it up online. Parsec's controllers are not special and just work as if an ordinary xbox controller was plugged on the host computer via USB. Most emulators need you to configure the controllers in their settings, and some games require you to enable multiplayer somewhere, or configure it further. If the guest controllers do work on the website, it means Parsec is passing the controller correctly, and the rest is up to the game/emulator. Parsec only connects the controllers if guests press buttons on them