I've played your replay to check if there's something wrong with your racing line but there's much bigger problems than just a racing line...1. Use manual gearbox
Try not to steer like: forward then full lock then forward and full lock...
Maybe you need to calibrate your controler or just learn to turn more slowly.
Fastest ps2 joypad BL2 racer is Barn - ask him about using this controler. (He's quite friendly. And you can tell him that I sent you to him for help)
Usually he's racing at [AA] Rallycross GTI server.
If you'll get everything from above try next step wich is proper racing line.
Try this example: http://www.lfsworld.net/get_spr.php?file=28151 (It's my hotlap)
Save it to LFS\data\spr
On this track it's very important to know where to change gears. Learn it from my replay.
I'll try to find a setup for newbies on bl2/xfg (it's not any shame to use it because fast racer can make a really fast time with it. really)